What Is the Difference Between Corporations, LLCs, and Partnerships?
content.team • October 15, 2024

October 15, 2024

Man’s hands, rifling through a stack of business papers in NYStarting a business requires choosing the right structure.  Three options  are corporations, limited liability companies (LLCs), and partnerships.

Your choice can impact your finances, taxes, and liability, so selecting the right one is essential for the health of your business long-term.

McPhillips, Fitzgerald & Cullum LLP, serving Glens Falls, Chestertown, and Miami Shores since 1911, is here to help you find the best option for your needs.

Our experienced  attorneys , widely recognized as a pillar of our local legal community, are dedicated to providing personalized support. They have extensive experience forming, selling, transferring, and dissolving businesses and corporate entities.

Here’s what you need to know about the differences between corporations, LLCs, and partnerships.

Understanding Corporations

A corporation is a separate legal entity. It exists independently from its owners. This setup protects from personal liability, so owners (shareholders) aren’t responsible for the company’s debts.

Shareholders risk only their investment in the company, not their personal assets. Corporations pay their own taxes, separate from owners’ taxes.

Large businesses that want to raise money by selling shares often opt for corporation structuring.

Advantages of Choosing an LLC

A Limited Liability Company, or LLC, blends corporate and partnership features. LLCs protect owners (called members) from personal liability.

Members report profits and losses from the business on their individual tax returns.

This “pass-through” structure makes taxes easier because the LLC doesn’t pay corporate taxes. This avoids the double taxation that corporations can face.

LLCs can be managed by their members or appointed managers.  Small and medium-sized businesses often choose LLCs for  their  flexible management and simple taxes.

Key Points About Partnerships

Partnerships involve two or more people who share ownership and  management of a business. There are two types: general and limited.

In a general partnership, all partners manage the business and share liability. In a limited partnership, some partners only invest without taking on liability.

Partnerships are simple to form with few formalities.

Companies that want a simple structure and are comfortable with shared management may opt for partnership structuring.

Help With Corporations, LLCs, and Partnerships in Glens Falls

Each option discussed here can have many variations and forms, so having expert legal help is crucial in managing your business. Choosing the right business structure helps protect your interests.

For guidance, call McPhillips, Fitzgerald & Cullum LLP at our Glens Falls and Chestertown offices at 518-792-1174 or our Miami Shores office at 305-751-8556 to  schedule your consultation.

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