Question

A Limited Liability Company has limited liability and at the same time is not subject to...

A Limited Liability Company has limited liability and at the same time is not subject to double taxation. Therefore, it has the advantage of both a partnership and a corporation. Then why would people still set up their firms as corporation?

Homework Answers

Answer #1

People would set up their firms as Corporations because Corporations are the best vehicle for eventual public companies. Corporations are ideal vehicles for raising the investment capital. A corporation which is seeking to raise capital need only sell shares of its stock. The purchasing shareholders pay cash or property for their stock and then they become part owners in the corporation. Of course, the sale of corporate stock is heavily regulated by the U.S. Securities and Exchange Commission and by state securities laws but still they are the ideal ones for raising capital from the public. Moreover, Corporations have a reliable body of legal precedent to guide owners and managers which a Limited Liability Company doesn't have.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
As discussed in the textbook, large accounting firms and other professional firms operate as limited liability...
As discussed in the textbook, large accounting firms and other professional firms operate as limited liability partnerships (LLPs). Compare and contrast the advantages and disadvantages of an LLP form of business and a C Corporation. Suggest the significant tax reasons why a new entity would choose an LLP over a traditional partnership or a C Corporation.
LM, a domestic limited liability company (LLC), is formed in March of the current year. The...
LM, a domestic limited liability company (LLC), is formed in March of the current year. The entity has two members and does not disregard its default classification for tax purposes. What is the default classification of KLM for tax purposes? A. Partnership. B. Association taxed as a corporation. C. Limited liability company. D. Sole proprietorship
4. Forms of business organizations Businesses can be classified into the following forms: proprietorship, partnership, corporation,...
4. Forms of business organizations Businesses can be classified into the following forms: proprietorship, partnership, corporation, limited liability company (LLC), and limited liability partnership (LLP). Different forms of businesses have different characteristics. Which of the following characteristics belong to a limited liability company? Check all that apply. ( ) Types of businesses that may adopt this form designated by states ( )Owners with limited liability and possibly significant input into daily management of the firm ( ) Subject to double...
Which form of organization has ownership claims which that potentially are the most liquid? (= easy...
Which form of organization has ownership claims which that potentially are the most liquid? (= easy to sell ownership) a-Sub-chapter d-corporation b-CorporationGeneral partnership c-Limited partnership In which of the following ways does a proprietorship differ from a partnership? a-Taxation b-Owner liability c-Liquidity of ownership d- Number of owners in what ways does a limited partnership differ from a corporation? Ease of start-up Limited liability of owners Taxation Some owners do not participate in the day-to-day operations of the firm
why are partnerships different than a limited liability company or an s corporation?
why are partnerships different than a limited liability company or an s corporation?
13. Which of the following statements is CORRECT? Group of answer choices One of the disadvantages...
13. Which of the following statements is CORRECT? Group of answer choices One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt. Sole proprietorships are subject to more regulations than corporations. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones. Corporations...
Doug decides to start a business transporting toxic waste from the North Dakota oilfields. He has...
Doug decides to start a business transporting toxic waste from the North Dakota oilfields. He has found an inexpensive truck for hauling the waste. Doug knows the truck is inadequate and is looking for the best business entity to protect his personal assets. Which of the following is true? Question 18 options: Doug should select a limited liability company which permits single owners, protects him from personal liability and avoids a court "piercing the veil" to access his personal assets....
1. If you own a corporation, you can: A. lose your home if your company gets...
1. If you own a corporation, you can: A. lose your home if your company gets sued B. raise money by selling stock C. avoid double taxation D. none of the above 2. The sole proprietorship: A. is easy to start B. does not cost too much to open C. incurs unlimited personal liability for the owner D. all of the above 3. The ____________ is the form of ownership used by the majority of businesses in the country. A....
1. An IOU ("I owe you") from your brother-in-law is a financial asset. True    False 2. The...
1. An IOU ("I owe you") from your brother-in-law is a financial asset. True    False 2. The separation of ownership and management is one distinctive feature of both corporations and sole proprietors. True    False 3. Shareholders welcome higher short-term profits even when they damage long-term profits. True    False 4. A well-designed compensation package can help a firm achieve its goal of maximizing market value. True    False 5. While control of large public companies in the United States is exercised through the board of directors...
7. Two analysts are overheard discussing technical trading rules. One says, "I have noticed over the...
7. Two analysts are overheard discussing technical trading rules. One says, "I have noticed over the last year or so that the market rises to about 11,000 and then falls back. It seems to do that every two to three months. At the bottom, it goes to about 10,000 and then rebounds. It's sort of like watching a roller coaster." The market consistently staying in a band between 10,000 and 11,000 is most likely to be used as evidence against...