Pros And Cons Of Mainstreeter Law

| The partners are jointly and severally liable for business debts and obligations. The partners are held personally responsible for the business and may be sued personally for liability. Partners’ personal assets are subject to lawsuit(s) made against the business. Lack of continuity; death of a partner may end the partnership/business if a buy/sell agreement is not in place. Disagreements may be difficult to resolve.

As a hybrid of partnerships and corporations, LLC’s provide limited liability for debts and flexibility to be taxed as a partnership or corporation (Staring and Naming a Business Presentation, 2012, Slide 5). Some specific advantages include being empowered authorities in the management of the business, diversity of members, limited liability, pass-through taxation, and less paperwork (appreciated by many). A drawback of this business structure is the need for a tailored operating agreement that specifies the specific needs of the

General Partnerships are not without their disadvantages. Without being an incorporated company the owners are still subject to issues such as liability, control, and location issues.

When it comes to partnerships Alex, Bill, Carl, and Devon will have two options- a general partnership or a limited partnership. Partnerships are beginning to be a business form of the past. Once upon a time, partnerships were “the default form of business and provided the benefit of pass-through taxation, but lacked the important feature of limited liability” (Chrisman, 2010, p. 465). In a general partnership, each partner associated with the entity will be held liable for their own business decisions as well as

Because the general partner holds majority of the interest and the limited partners are prohibited for participating in the control of the business.

Liability All liabilities are the responsibility of each partner. In the event of litigation, any creditors can go after the personal assets of each partner to recover any debt owed. But since liability is spread out between the owners, one may feel less risk is being taken. 2. Income Taxes General partnership may also benefit from pass-through taxation, meaning the partners are taxed like sole proprietors. Business income is reported on the personal tax filing while business losses can be deducted to reduce personal tax liability. The partnership itself is not subject to federal income tax. However the partnership needs to file an information return utilizing the IRS Form 1065. 3. Longevity or continuity of the organization Once the partnership agreement is fulfilled, the general partnership may dissolve. A buy/sell agreement may be included in the articles of the partnership to allow the

Convenience/Burden- Like a general partnership a limited partnership is easily formed and can enjoy pass through-taxation. It can also be easier to get financing with a limited partnership. A downfall of the limited partnership is that the death of a general partner can dissolve the partnership unless a prior agreement has been established.

This protects the limited partners from the full liability that is shared by the general partners.   Income Taxes – The limited partner’s profits are considered personal income and taxed as such. All profits from the limited partnership are considered personal income and taxed at their personal tax rates.  Longevity / Continuity – The continuity of the business is not affected by the death or disassociation of a limited partner.  An advantage for a limited partner is that the limited partner’s investment takes priority in the general partnership dissolves due to a death or disassociation of one of the general partners.

It would also be beneficial to set up a limited liability company. (LLC) A LLC limits the partner’s liability to your basis in the company

| Any new domestic eligible entity having at least two or more members is classified as a partnership.

When adding up all of the start-up fees, they equal about $3,600. The monthly expenses, including the $600 net mortgage payment, equates to roughly $2,600 per month. It is important to note that this does not include salaries for any support staff. At this time, Mainstreeter Law does not intend to hire any support staff, such as paralegals. As the firm grows, however, this will become another expense. The average yearly salary for a paralegal in Central Minnesota is roughly $36,000. As for partner compensation, the partners will not pay themselves a set yearly salary. Their compensation will come from whatever surplus profit there is. End of the year bonuses will be distributed based off of the formula listed in Section

Tinker & Tailor’s Home Security Service: “The limited partnership form of business organization was primarily created to address one of the worst shortcomings of the traditional partnership form: unlimited personal liability for financial obligations incurred by the partnership” (Seaquist, 2012). Those involved in a limited partnership are in a unique situation in that they are only legally responsible for their investment in the partnership

From the above mentioned formations and having in mind the concerns of Gloria Smithson about insulting herself and her family from personal liability, we have come up with a set of three proposed business formations:

The advantages to a LLC are: 1) Reduction of personal liability. A sole proprietor has unlimited liability, which can include the potential loss of all personal assets. 2) Taxes. Forming an LLC may mean that more expenses can be considered business expenses and be deducted from the company’s income. 3) Improved credibility. The business may have increased credibility in the business world compared to a sole proprietorship. 4) Ability to attract investment. Corporations, even LLCs, can raise capital through the sale of equity. 5) Continuous life. Sole proprietorships have a limited life,

Those legal structures are: sole trader,partnership,partnership with limited liability(LLP),private limited company (LtD) and public limited company (PLC).