Question

The LiveStrong Foundation, founded by Lance Armstrong, is a not for profit corporation. Discuss the advantages of a not for profit corporation in general compared to a "for profit" Corporation. In addition, discuss the differences between a Limited Liability Company and a "for profit" corporation. 2 Internet citation in APA style.

Answer 1

Advantages of a “not-for-profit corporation” in general compared to a “for profit” corporation are as follows-

1. Donations made by individuals to the not-for-profit corporations are tax deductable while it is not tax deductable when investing in for profit corporations.

2. Not-for-profit organizations are exempted from state sales and property tax while for profit organizations are not exempted from tax.

3. Not-for organizations gave limited liability protection to its directors, officers and members. They are not personally responsible for their company’s debts and liabilities. While in for profit corporations directors, officers and members are personally responsible for company’s debt and liabilities”.

4. Some not for organizations are eligible for public and private grants while for profit organizations are not eligible for public and private grants.

Differences between limited liability company and a “for profit corporations” are as follows-

1. Limited Liability Company is formed by one or more people, as owners. While “for profit corporations” are formed by group of people, they have board of directors, it can issue stock and shareholders are the real owners of the business.

2. “For profit Corporation” is owned by its shareholders and Limited Liability Company is owned by individuals who formed the company.

3. Limited liability company’s profits and losses are passed through to individual owners while “for profit corporations’” profits and losses are held by corporation and paid to the owners in forms of dividends and some earnings may be kept by the corporation.

4. For profit corporations are taxed at the corporate rate and Limited Liability Company are taxed based on the total Adjusted Gross Income of its members.

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