Special Business Structures
Beyond the five basic structures, there are a few special structures that are available in some, but not all, countries and states.
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 states that do recognize them 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 find out 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 of this structure 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
Non-profits 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.
References:
• Small Business Administration
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