Question

What are the differences between a/an

1. Limited liability partnership
2. Limited liability corporation
3. S corporation?

Answer 1

1.) Limited Liability Partnership (LLP):-

LLPs have more than one owner, each of whom has a limited amount of personal liability for business-related debts. Licensed professionals, such as doctors and lawyers, mainly use LLPs as part of their group practice. An LLP partner enjoys liability protections against another partner's debts or lawsuits, ensuring all the personal assets are never used to pay for another's mistakes.

LLPs are easier to organize than the corporations, make them a good option for professionals who wants to enjoy the liability protection.

2.) Limited Liability Corporation (LLC):-

An LLC is a flexible business option. However, regulations differ by state, and not every business qualifies as an LLC. Limited liability companies enjoy “pass-through” taxes. This means all business profits and losses are reported on the owners' personal tax returns.

The LLC owners who are referred to as members are protected from personal liability for business claims or debts.

3.) S Corporations:-

The IRS grants S corp status to certain C corporations. So, an S corporation is technically not a legal business structure. The change in corporate status affects the company's profit taxation. S corp status is intended for small- to medium-sized domestic companies. As such, an S corp cannot have more than 100 shareholders. These shareholders are not liable for business-related debts.