Owned by a single individual who is personally liable for all of the obligations of the business since there is no legal separation between the owner and the business.
This is the easiest way to do business. Do not have to create an entity and can do business under a different name by filing a fictitious name form with the State.
All the income from the company goes on the owner’s tax return. Single taxation. High liability but good tax treatment. This business form provides no liability protection for the owner.
As the company gets bigger so do the risks associated with it so an owner will generally transfer the business to a LLC or wholly owned corporation.
No structure really so it probably shouldn’t even be called a business organization.
A partnership is formed if two or more persons go into a co-owned business without any thought or planning of what the relationship is. An oral agreement to share profits may be sufficient to establish the existence of a general partnership even though initial financial contributions are unequal. Sometimes referred to as a “general partnership.
Flow Through Taxation – The partnership is not tax, it flows through to the partners. Each partner is taxed on his share of the profit regardless of whether he receives any cash distributions.
Liability is unlimited. Each partner is personally liable for the entire share, not just their own share. Each partner owes 100% of the liabilities.
This is the default form of business b/t two people.
Dissolutionà may be dissolved at any time by a statement of express will from a partner.
Limited Liability Partnership (LLP)
A general partnership in all respects except that the statute provides that partners have no personal liability for firm obligations that exceed the assets of the general partnership. Partners in an LLP, however, have full personal liability for claims arising from their own misconduct. (Attempt to get partnership law in synch w/ LLC law) (Popular w/ law and accounting firms but not commercial businesses)
Need to file a form with the state to be an LLP
Partners are liable for their own actions and actions of those under their control and supervision; partners not typically liable for the debts of the LLP.
MO § 358.150 allows for limited liability for a LLP except for a partners own negligence and misconduct.
Limited Partnership (LP)
Must have at least one general partner and can have many limited partners. The general partner has unlimited liability and usually manages the business. The limited partners are the investors with no management role and limited liability. In the absence of an agreem
Articles of Organization are filed with the Secretary of State. Operating Agreement serves many of the same functions as the partnership agreement. Owners are called ‘members’.
All investors get to vote on stuff
If you have a lot of investors, you don’t want this. (imagine having to call in 50 investors every time you want to do something)
Either one person or a small group of people running the place
Started because some company wanted flow through taxation and limited liability, now everybody wants it. Most popular now.
Benefits of incorporation w/o the limits applied to corporations
A business form that is a legally recognized entity that provides limited liability to the owners (shareholders). Chapter 351 of RSMo. (A fictitious entity w/ sole responsibility for its own obligations)
Classes of Corps
Do not have publicly traded shares