Special
Structures
Sole
Proprietorship
The
following business structures are available in
some states, but not all.
Limited
Liability Partnership (LLP)
LLPs
are organized to protect individual partners from
personal liability for the negligent acts of other
partners or employees not under their direct control.
LLPs are not recognized by every state and those
that do sometimes limit LLPs to organizations
that provide a professional service, such as medicine
or law, for which each partner is licensed. Partners
report their share of profits and losses on their
personal tax returns. Check with your Secretary
of State's office to see if your state recognizes
LLPs and if so, which occupations qualify.
Professional
Service Corporation (PS)
A
PS must be organized for the sole purpose of providing
a professional service for which each shareholder
is licensed. The advantage here is limited personal
liability for shareholders. This option is available
to certain professionals, such as doctors, lawyers,
and accountants. Check with your Secretary of
State's office to find out which occupations qualify.
Limited
Partnership (LP)
LPs
have complex formation requirements, and require
at least one general partner who is fully responsible
for partnership obligations and normal business
operations. The LP also requires at least one
limited partner, often an investor, who is not
involved in everyday operations and is shielded
from liability for partnership obligations beyond
the amount of their investment. LPs do not pay
tax, but must file a return for informational
purposes; partners report their share of profits
and losses on their personal returns.
Non-Profit
Corporations
These
are formed for civic, educational, charitable,
and religious purposes and enjoy tax-exempt status
and limited personal liability. Non-profit corporations
are managed by a board of directors or trustees.
Assets must be transferred to another non-profit
group if the corporation is dissolved
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