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Limited Liability and Partnership Corporation - Essay Example
Author : wittingasia
Finance & Accounting
Pages 3 (753 words)
Introduction:- Limited liability Company is a popular form of a company as one can limit the liability of sole proprietors or partners by establishing the company as limited liability company. This form of business is taken up as companies grow and expand, or in cases where individuals seek to magnify the scope of their businesses and seek to consolidate their comparative business standing…
This stipulation becomes of significant value when the company defaults or files for bankruptcy subsequently initiating a liquidation process. 2) Auditing Ease: - Limited liability companies require much less paperwork and bookkeeping than corporations. Also some of the standard laws of the company’s ordinance applicable on corporations do not apply on limited liability companies such as annual general meeting, appointment of directors, annual reports, etc. 3) Advantageous Tax Treatment: - A limited liability company has the privilege of being taxed as a sole proprietorship, partnership or a corporation. This fact is of significant value as several entities may chose different options depending on the state tax laws in place. 4) Avoiding Double Taxation: - Unlike corporations, Limited liability companies do not have to face double taxation, although the shareholders have limited liability. In corporations, taxes are applicable at the corporate level first and then at the shareholder level. Such is not the case with a limited liability company (Jitman, 2009). ...