A point-by-point comparison of sole proprietorships, general partnerships, limited liability partnerships, limited partnerships, and limited liability limited partnerships. Very general overview. Based on the text Business Law and Organizations for Paralegals (2nd ed) by Emily Morissette.

1. UNINCORPORATED
BUSINESS ENTITIES
A Quick Review and Comparison
LEGL 3430
Business Associations

2. SO FAR WE’VE COVERED…
 Sole Proprietorships (SPs)
 General Partnerships (GPs)
 Limited Liability Partnerships (LLPs)
 Limited Partnerships (LPs)

3. FINDING THE STATUTES

4. QUICK COMPARISON
Lots of Factors to Consider

5. OWNERSHIP
SP
GP
LLP
LP
One person only
Two or more
Two or more GPs (no LPs)
At least one GP, at least one LP
*Human
*Human/Entity
*Human/Entity
*Human/Entity

6. FORMATION
SP
GP
LLP
LP
Just start doing biz
Just start doing biz
 Often, existing GP votes (“election”)
 Docs must be filed w/SOS
Docs must be filed w/SOS
 Still might need
biz license, etc.
 Still need to file
form(s) w/SOS
 Written
agreements not
required, but
strongly advised

7. FINANCING
SP
GP
LLP
LP
Personal funds, loans
Personal funds, loans
Personal funds, loans
GP’s personal funds/loans + LP’s investments
 You can be
both a GP
and an LP at
the same
time

8. MANAGEMENT
SP
GP
LLP
LP
Owner manages (or hires someone)
GPs manage (or hire someone), per agreement
GPs manage (or hire someone), per agreement
 GPs manage (or hire someone), per agreement
 LPs can NOT manage (otherwise, possible liability)

9. AGENCY
SP
GP
LLP
LP
Owner = Biz (owner = agent)
All GPs are (a) agents of the biz
and (b) agents of each other
All GPs are agents of biz only
 All GPs are agents of (a) the biz and (b) each other
 LPs – it depends (usually not agents)
 Employees acting
within scope are
ALWAYS agents
(respondeat superior)
 Indep. Contractors –
it depends

10. LIABILITY
SP
GP
LLP
LP
Always (owner = biz)
Liable for self, partners, and biz
GPs liable for self and biz (details depend on agreement
& law – full shield or partial shield?)
 GPs liable for self, other GPs, and biz
 LPs only liable up to initial investment
LLLPs?

11. TAXES
SP
GP
LLP
LP
 Pass thru + self employment taxes
 Biz doesn’t file or pay anything
Pass thru (biz files doc w/IRS, but doesn’t pay)
Pass thru (biz files doc w/IRS, but doesn’t pay)
Pass thru (biz files doc w/IRS, but doesn’t pay)

12. TRANSFER / WITHDRAW
SP
GP
LLP
LP
None (biz = owner)
Only with unanimous consent
Only with unanimous consent
 GPs – Only with unanimous consent
 LPs – Easier (but still subject to agreement terms)

13. TERMINATION
SP
GP
LLP
LP
Just stop doing biz
Depends on agreement
Depends on agreement
Per agreement; court order; expiration;
no more GPs or LPs; bankruptcy; etc.