Among the factors you should consider include the manner in

Among the factors you should consider, include the manner in which each entity is taxed, and the potential legal liability that can result from (or that can be avoided by) each form; how the entity’s activity might impact the environment and the community; whether investors’ interest should trump the interests of others who may be impacted by the entity’s activities; etc. Be sure to consider all legal business forms covered in the course materials, including differentiating types of partnership and corporate forms.

Solution

General Partnerships

It involves two or more owners carrying out a business for purpose. In this general partners shares equal rights and responsibilities connected with management of the business. Each individual partner has full responsibility for all of the business\'s debts and obligations. This partnership comes with a tax advantage; in this profits of partner are not taxed to the business, but passes through to the partners, who include the gains on their individual tax returns at a lower rate.

Limited Partnerships

In limited partnership each partner restricts his or her personal liability to the amount of his/ her business investment. – In this at least one participant must accept general partnership status, as every partner can’t benefit from this limitation exposing himself / herself to full personal liability for the business\'s debts and obligations. Both general and limited partners are benefited from business profits. The main tax advantage of a limited partnership is that all profits and losses flow directly to the individual limited partners. The business itself pays no taxes on its income.

Limited Liability Partnerships (LLP)

Limited liability partnerships (LLP) offer some personal liability protection to the participants; it retains the tax advantages of the general partnership form. Individual partners in a limited liability partnership are not personally responsible for the wrongful acts of other partners, or for the debts or obligations of the business. Some state tax authorities may subject a limited liability partnership to non-partnership tax rules.