Question

What types of shareholder limitations exist in each of the other forms of business structure that might be elected? Partnership S corporation C corporation LLC sole proprietorship

Answer 1

1) Sole proprietorship : - sole proprietorship are not designed to have shareholders or stakeholders. You can own shares or stock only in a company that has been formed as a separate entity from it's founder. A Sole proprietorship is not considered as a separate entity from it's founder.

2) Partnership : - Partners in a partnership do not own shares or stock certificates in a partnership. Instead partners own partnership interest or a percentage stake. Owners of a corporation owns shares in that corporation. Only loan made by shareholders can be called as shareholders loan, loan given by partner are refered as partner loan.

3) S corporation : - The number of shareholders in S corporation is limited to 100 shareholders. Further, a S corporation shareholders can be an individual, estate and certain tax-exempt entity and trust, and individual must be an U. S Citizen or permanent resident.

4) C Corporation : - C Corporation have no restrictions on ownership or on shareholders or stakeholders. There is no limitations or limiting factor deciding the number of shareholders or stakeholders.

5) LLC (Limited liability company) : - Instead of owners or shareholders LLC have members. LLC cannot issue shares or cannot have shareholders. The minimum members required for LLC is two and there is no limit on maximum members.