Case Study: The Benefits Of A Limited Liability Company

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This case study deals with persuading the acquaintances regarding the type of business a business starter should adopt. The acquaintance is intending to start a new as general partnership. The case study deals with presenting the benefits of Limited Liability Company and the reasons that make a limited liability company a better option. For the purpose of this case study a brief insight will be provided on the both the types of business that is the general partnership and the limited liability. Further, the paper will elaborate the benefit that choosing the limited liability option to start business will cater. Analysis of the Case Study General Partnership In a general partnership, two or more persons are required to carry out the business activity. In the general partnership, the loss and profit flows through to the partners. The business is not a separate tax entity. The share of profit or loss that the partners receive report on their individual income tax returns. Generally, in the partnerships, the members enter through written…show more content…
The tax is charged on the personal income of the partners. By this manner the businesses does not pay tax…show more content…
Limited liability has a separate legal existence from its owners (known as members). In order to be a member of limited liability, all members are required to enter into an operating agreement. For the tax purpose, the company is not treated as a separate tax entity. LLC has the feature of partnership i.e. the owner’s reports losses and profits of businesses in their personal income tax return. The limited liability clause prevents the partners from personal liability of the debt of the business. This means that in case of any debt lawsuit only the assets of the business are at
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