Business Organizations Frequently Asked Questions


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A Limited Partnership has general partners and limited partners. The general partners share in the management and profits of the partnership. The limited partners can share in the profits of the partnership but do participate in management of the partnership.
If properly created most/all states shield individual limited partners from joint liability for partnership obligations created or misconduct caused by another partner or person.
A limited partner is generally only individually liable for their own misconduct or misconduct of others done under the limited partners supervision or control. The partnership remains liable for obligations created and misconduct of the partners.

A corporation is a legal entity created under the laws of a state. It generally provides for multiple owners with central management.

Yes. A corporation must be created in compliance with the laws of a State. There is no procedure to create a corporation under the laws of the Federal Government.

007 – A corporation is a legal entity created under the laws of a state. It generally provides for multiple owners with central management.

Yes. There are General of For Profit Corporations, Non-profit Corporations, Professional Corporations and Close Corporations. Each of these types of corporations have different requirements or limitations as to who or for what purpose they can be created but all of them are treated equally as corporations under the law.

Yes. Just like a corporation a Limited Liability Company or LLC must be created according to the laws of a State. Likewise there is no procedure for creating a Limited Liability Company or LL under federal Law.

No. the liability exposure of the owners of a business entity can vary greatly depending on the manner that business is operated. A full understanding of the risks and liability exposure should be considered before choosing a form of business, just as the advantages and disadantages of the different forms of business should be carefully considered.

If a person has “personal liability” that means they are fully responsible for the liabilities of the business as if they personally created the liability and their personal assets may be reached to satisfy business liability even if those assets where never part of the business.

If a person has “Limited Liability” that means they are generally only responsible to the extent of any funds that they invested in the business.

A sole proprietor is personally responsible for all the debts or liabilities of the business. This can include debts and liabilities created by other persons who work or are authorized to act for the business.

A general partner is personally responsible for all the debts or liabilities of the business. This includes debts and liabilities created by other partners and persons who work or are authorized to act for the business.

A limited partner’s liability is usually limited to their investment or contributions to the business. However special circumstances may cause personal liability.

A shareholder’s liability is usually limited to their investment in the business.

The liability of a Member of a limited liability company is limited to their investment or contributions to the business.

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