What are partnerships and limited liability companies?

Some business owners opt to partnership or limited liability company rather than a company. A partnership company also can be invoked and refers to a group of a group of people working together in a business or professional practice.

While companies have strict rules about how they are structured, partnerships and limited liability companies, rights, distribution of administrative authority, profit-sharing and property owners in which is very flexible.

Partnerships classified in two categories. General partner is unlimited liability. If a company is unable to pay its debts, his creditors payment from General partners personal assets. The general partner has authority and responsibility for administering business. They are analogous to the President and other officials of an organization.

Limited partners fly unlimited responsibility as general partners. They are not responsible for individuals, for obligations of the partnership. These are the junior partner to property rights in and to the benefit of the company, but they are usually not involved in the management of high company. A partnership must have one or more general partners.

A limited liability company (LLC) is all small businesses. An LLC is a company for joint-stock company and it is a partnership with flexibility for the distribution of profit among shareholders. Its advantage over other types of property is its flexibility in how profit and managing authority. This can be a drawback. The owners have very detailed agreements on how profit and management responsibilities are shared. It can get very complex and generally require a lawyer to draw up the contract services.

A partnership or LLC agreement determines how prizes will be shared between the owners. As a shareholder in a company had a share in profits that directly relates to how many shares they have, a partnership or LLC does not distribute profits according to how much each partner invested. Invested capital is only of the factors used for the allocation and apportionment of benefits.

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