The difference between Partnership and Limited Liability Company (LLC)
Partnership:
A partnership is a legal arrangement where two or more individuals or entities agree to carry on a business together and share profits, losses, and liabilities. Key terms associated with partnerships include:
- General Partnership: A partnership where all partners have unlimited liability for the business’s debts and obligations.
- Limited Partnership: A partnership that consists of general partners who have unlimited liability and limited partners who have limited liability.
- Partnership Agreement: A written agreement that outlines the rights, responsibilities, and obligations of each partner.
Limited Liability Company (LLC):
An LLC is a flexible business structure that combines the benefits of a partnership and a corporation. Some key terms associated with LLCs include:
- Member: An owner of an LLC.
- Operating Agreement: A document that outlines the internal operations, rights, and responsibilities of the LLC and its members.
- Limited Liability: The protection of personal assets from business liabilities.
Corporation:
A corporation is a legal entity that is separate from its owners. Key terms associated with corporations include:
- Shareholder: An individual or entity that owns shares of a corporation.
- Board of Directors: A group of individuals elected by shareholders to oversee the corporation’s management.
- Articles of Incorporation: A legal document that establishes the existence of a corporation and outlines its purpose and structure.
I hope this overview helps you better understand the key terminology in partnerships, LLCs, and corporations. If you have any further questions or need more information, please don’t hesitate to reach out. All of our contact information can be found at ravosalaw.com.
This is only intended to be information and does not constitute legal advice nor does it create any attorney-client relationship with the firm.