Please fill in the blanks: Types of Legal Ownership Ownership Structures Sole Pr
ID: 433549 • Letter: P
Question
Please fill in the blanks:
Types of Legal Ownership
Ownership Structures
Sole Proprietor
General Partnership
Limited Liability Company (LLC)
Corporation
Number of Owners
One or more
Multiple
Formation Difficulty
Low
Medium
Liability
Sole proprietor has unlimited liability.
Officers/shareholders are not typically responsible for the debts of the corporation.
Operational Requirements
There are relatively few legal requirements.
Formal board of directors, annual meetings, and annual reporting required.
Management
Sole proprietor has full control of management and operations.
Members have an operating agreement that outlines management.
Federal Taxation
It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.
It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.
Ownership Structures
Sole Proprietor
General Partnership
Limited Liability Company (LLC)
Corporation
Number of Owners
One or more
Multiple
Formation Difficulty
Low
Medium
Liability
Sole proprietor has unlimited liability.
Officers/shareholders are not typically responsible for the debts of the corporation.
Operational Requirements
There are relatively few legal requirements.
Formal board of directors, annual meetings, and annual reporting required.
Management
Sole proprietor has full control of management and operations.
Members have an operating agreement that outlines management.
Federal Taxation
It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.
It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.
Explanation / Answer
Ownership Structures
Sole Proprietor
General Partnership
Limited Liability Company (LLC)
Corporation
Number of Owners
One or more
Multiple
Formation Difficulty
Low
Medium
Liability
Sole proprietor has unlimited liability.
Officers/shareholders are not typically responsible for the debts of the corporation.
Operational Requirements
There are relatively few legal requirements.
Formal board of directors, annual meetings, and annual reporting required.
Management
Sole proprietor has full control of management and operations.
Members have an operating agreement that outlines management.
Federal Taxation
It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.
It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.
Ownership Structures
Sole Proprietor
General Partnership
Limited Liability Company (LLC)
Corporation
Number of Owners
One One or moreOne or more
Multiple
Formation Difficulty
LowLow
Medium
HighLiability
Sole proprietor has unlimited liability.
Unlimited liability for some partners* Membersnot liable for LLc obligations.Officers/shareholders are not typically responsible for the debts of the corporation.
Operational Requirements
Few Government regulationsThere are relatively few legal requirements.
Relatively Medium legal requierements.Formal board of directors, annual meetings, and annual reporting required.
Management
Sole proprietor has full control of management and operations.
Partners have management authorityMembers have an operating agreement that outlines management.
By directors and officers.Federal Taxation
Tax advantages if struggling,Profits taxed onceIt is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.
Taxed as a partnershipIt is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.