LLC and LLP

LLC and LLP
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(12, October, 2010)
LLC and LLP
Introduction
The paper is seeks to explain the roles of limited liability corporations as well as limited liability partnership. The essay further stipulates the circumstances under which one would choose one of the two when establishing my industry of choice which is a Medical Small Practice.
There are various business entities that can be chosen by business owners; these include sole proprietorship, general partnership, limited partnership, registered limited liability partnership, limited liability company and business corporation. The choice on which to use in conducting business opt to be settled on after serious considerations.
Limited Liability Corporation (LLC) entity has a blend element of partnership and corporate structures and is characterized with a liability-shield advantage of a corporation and the flexible tax-pass through advantages of a partnership (Noe & Smith, 1997).
According to Bromberg & Ribstein (1995), Limited Liability Partnerships (LLP) an organization whereby persons in the partnership are fully cosseted from another member of the partnership liabilities. The organization is recognized as partnership for federal as well as state taxations. These two entities have roles and advantages over each other.
Thesis statement
The choice to make concerning the entity of one’s business (between LLP and LLC) has been deemed a tricky affair. To do that successfully, there is need to evaluate LLC and LLP roles as well as their advantages over each other. It is advisable that consulting an attorney is paramount.
Role of limited liability corporations
According to Bromberg & Ribstein (1995), LLCs came into limelight in 1990s as business organizations. Within its structure there is a mixture of a corporation and that of a general kind of partnership. Its much popular business set up as members have limited liability when it comes to company’s debts.
It structure is made up of shareholder/members, directors and officers. Members own the corporation via shares thus rightfully attending meeting that takes place once a year but with some exception especially if there is need of changing directors. Their major role include voting for issues that deals with the corporation’s articles of Incorporation such as issuing of shares, to change the name of the corporation, restrictions on transfer and business, electing directors as well as setting new classes for shares. Members generally play a role indirectly in most cases as they delegate the powers to make decision to the directors they elect (Noe & Smith, 1997).
Directors meet regularly to make decisions on the long term strategies for the organization. They also delegate the responsibility of making decision to officers who run the day to day activities of the corporation. Additionally, directors shoulder the decision of declaring as well as payment of dividends to members.
Officer are those person bestowed with the responsibility to run day to day activities of the corporation. Their tasks, duties and responsibilities are clearly stipulated in the contract as well as the by law.
The main role of LLC are to distribute profits to members or partners that have reported it on their personal income tax returns, finally LLC role is to protect members/shareholders (themselves) from personal liabilities and business debts (Dean et al. 2000).
Role of limited liability partnerships
LLP is more less the same with ordinary partnership because members share risks, costs, responsibilities as well as revenue generated. The issue of liability being limited on the basis of the amount each member invested in the business set up is what brings the differences. What this implies is that are somehow protected incase the set up experiences some kind of problems. Members in this kind of business set up take an active role in the business.
LLP role is to ensure that members/shareholde...