Question

why are partnerships different than a limited liability company or an s corporation?

Answer 1

A partnership is different when compared to the limited liability company or an S corporation because the partnership is defined to be a business with two or more partners with more flexibility in the ownership and the treatment of taxes however not organized than as an S corporation. The limited liability company experiences less extensive internal formalities compared to S corporations. The members in LLCs can be unlimited but S corps cannot have more than 100 shareholders

S corporation stock is transferable freely if the IRS ownership restrictions are fulfilled. The membership interest (ownership) in LLC cannot be transferable freely as it requires the approval from other members. S corporations can choose for the self-employment taxes in comparison to LLC because the owner can be categorised to be employee and paid an amount for the salary.