Question

Explain the establishment of a corporation coming from a partnership formation.

Answer 1

A limited liability corporation/company is a corporation coming from partnership formation.

For the formation of partnership, following is necessary

1) Two or more persons

2) Co-ownership

3) Business for profit

A limited liability company is a corporate structure whereby the members of the company are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation and a partnership

An LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity. An LLC cannot be a public listed company.

The primary reason business owners form LLC is to limit the personal liability. Many view an LLC as a blend of a partnership, which is a simple business formation of two or more owners under an agreement, and a corporation, which has certain liability protections. An LLC is a more formal partnership arrangement requiring articles of organization to be filed with the state.

The primary difference between a partnership and an LLC is that an LLC separates the business assets of the company from the personal assets of the owners. An LLC functions similar to a partnership in that the profits of the company pass through to owners’ tax return.