when we’re looking at business

planning you’re looking at a choice

between corporations

Partnerships which could be a general

partnership or a limited partnership and

limited liability companies and within

the group of entities

there are some tax advantages and then

there’s some liability protection

advantages

so with corporations they’re the gold

standard they’ve been around for a long

time and with a corporation we’re

putting our business activity inside the

corporation so that should something

happen poorly inside the business

personally were protected we encapsulate

that liability inside the corporation

and it works very well for that

for tax purposes either we want the

corporation to pay its own tax or it’s

going to eventually go public and

corporations tax separately were

referred to as C corporations are

preferred sometimes it’s better for us

to have the income flow through to the

owner

it means there’s only one level of

income tax and then we can elect to be

an S corporation now if we go to

Partnerships General Partnerships aren’t

used as often as they used to because in

a general partnership this beginning

point is every partner is personally

responsible for whatever happens inside

the partnership so you’ll see more

limited Partnerships which allow people

who are investors or people who want to

be involved but not have personal

liability they can be limited partners

limited Partnerships

have flow through tax meaning whatever

profit is earned at the partnership

level is reported to the partners and

they pay tax individually

and then you have limited liability

companies known at llc’s they’re new

they’ve only been around since the early

80s and they have certain positive

benefits of Corporations and other

positive elements of Partnerships

so limited liability companies protect

the owners for business risk but also if

the owner is sued in his personal life

there’s a charge order protection that

prevents the personal creditor from

taking the business away from the owner

and then they’re very unique for income

tax because with limited liability

companies you can make elections to be

taxed as a partnership as an S

corporation

and in certain instances the LLC isn’t

even recognized as a separate entity for

tax reporting