The Different Types of Companies

Ease and Costs of Formation

Statement of Partnership Authority (GP-1), $70 – optional.

Certificate Of Limited Partnership (LP-1), $70.

Articles of Incorporation, $100; Statement Of Information due within 90 days of filing.

Articles of Organization (LLC-1), $70; Statement Of Information due within 90 days of filing.

Documents Required

Oral Agreements permitted, but detailed written agreement highly recommended.

Oral Agreements permitted, but detailed written agreement highly recommended.

Bylaws, First Minutes, Shares, Shareholders Agreement, “Corporate Formalities” must be respected (e.g., annual minutes).

Oral Agreements permitted, but detailed written “operating” agreement highly recommended.

Management
And Control

All partners have equal rights in management, but flexibility of entity permits parties to create management structure.

Managed by general partners. Limited partners involved in management risk losing their limited liability status.

Shareholders elect Directors, who manage corporation. Directors appoint officers. Rigid structure required.

Shareholders elect Directors, who manage corporation. Directors appoint officers. Rigid structure required.

Liability

Partners are jointly and severally liable for obligations of partnership.

General Partner liable for obligations of partnership. Limited partners’ liability limited to the amount of their capital contributions.

Shareholders not liable for obligations of corporation unless (1) personal guarantee; or (2) creditor “pierces corporate veil.”

Members not liable for obligations of LLC unless (1) personal guarantee; or (2) creditor “pierces corporate veil.” Tough standard to pierce veil.

Taxation

Pass through entity.

Pass through entity.

“S” Corp/ “C” Corp.

Pass through entity.