Choice of Entity and Formation:       “TLC” for your Business      Washington, DC Economic Partnership               Josep...
T    axes    L   iability Protection    C   orporate Formalities                               © 2012 Venable LLP2
Sole Proprietorship      Taxes: Pass-through taxation; ordinary income to      owner.      Liability Protection: None     ...
Sole Proprietorship – Sources of Funding      Contributions from the owner.      Bank lending – based upon the credit wort...
General Partnership     Taxes: Pass-through taxation; ordinary income to     owners.     Liability Protection: None     Co...
General Partnership – Sources of Funding.      Contributions from the partners.      Bank lending – based upon the credit ...
Limited Partnership     Taxes: Pass-through taxation; ordinary income     for both general and limited partners.     Liabi...
Limited Partnership – Sources of Funding      Contributions from both general and limited      partners.      Bank lending...
Limited Liability Partnership        Taxes: Pass-through taxation; ordinary income to        partners.        Liability Pr...
Limited Liability Partnership – Sources of Funding       Contributions from partners.       Bank lending – varies.       T...
“C” Corporations      Taxes: Double taxation      Liability Protection: Shareholder liability limited to      investment i...
“C” Corporations – Sources of Funding       Bank lending – based upon creditworthiness of       the Corporation.       Thi...
“S” Corporation      Taxes: Pass-through taxation; ordinary income to      shareholders. (Can “check the box” to be taxed ...
“S” Corporation – Sources of Funding      Bank lending – based upon creditworthiness of      the Corporation.      Third-p...
Limited Liability Company       Taxes: Pass-through taxation; ordinary income to       members.       Liability Protection...
Limited Liability Company – Sources of Funding       Bank lending – based upon creditworthiness of       the Company.     ...
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Venable | Starting a Business in DC

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Venable presented at the Washington, DC Economic Partnership's Doing Business 2.0 event (11/14/12).

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Venable | Starting a Business in DC

  1. 1. Choice of Entity and Formation: “TLC” for your Business Washington, DC Economic Partnership Joseph B. Walker, Esq. Venable LLP November 14, 20121
  2. 2. T axes L iability Protection C orporate Formalities © 2012 Venable LLP2
  3. 3. Sole Proprietorship Taxes: Pass-through taxation; ordinary income to owner. Liability Protection: None Corporate Formalities: None © 2012 Venable LLP3
  4. 4. Sole Proprietorship – Sources of Funding Contributions from the owner. Bank lending – based upon the credit worthiness of the owner, and owner is personally liable to the lender. Third-party equity investment: Not available. © 2012 Venable LLP4
  5. 5. General Partnership Taxes: Pass-through taxation; ordinary income to owners. Liability Protection: None Corporate Formalities: None © 2012 Venable LLP5
  6. 6. General Partnership – Sources of Funding. Contributions from the partners. Bank lending – based upon the credit worthiness of the partners, and partners are jointly and severally personally liable to the lender. Third-party equity investment: Partnership interests may be sold to third-parties who are willing to assume liability risks. © 2012 Venable LLP6
  7. 7. Limited Partnership Taxes: Pass-through taxation; ordinary income for both general and limited partners. Liability Protection: No protection for general partners; limited liability for limited partners. Corporate Formalities: Maintain distinction between general and limited partners. © 2012 Venable LLP7
  8. 8. Limited Partnership – Sources of Funding Contributions from both general and limited partners. Bank lending – varies. Third-party equity investment: General partnership interests may be sold to third-parties who are willing to assume liability risks; non- participating limited partnership interests may be sold to third-parties who will not be participating in management. © 2012 Venable LLP8
  9. 9. Limited Liability Partnership Taxes: Pass-through taxation; ordinary income to partners. Liability Protection: Limited liability for malpractice of other partners; no protection for general liabilities of the partnership. Corporate Formalities: None *Generally used in professions such as law firms, accounting firms, etc. © 2012 Venable LLP9
  10. 10. Limited Liability Partnership – Sources of Funding Contributions from partners. Bank lending – varies. Third-party equity investment: Partnership interests may be sold to individuals who are licensed to practice in the field in which the LLP does business. © 2012 Venable LLP10
  11. 11. “C” Corporations Taxes: Double taxation Liability Protection: Shareholder liability limited to investment in the corporation. Corporate formalities: Officers, annual meetings, records, etc. © 2012 Venable LLP11
  12. 12. “C” Corporations – Sources of Funding Bank lending – based upon creditworthiness of the Corporation. Third-party equity investment: Shares in the corporation may be sold to third-parties. © 2012 Venable LLP12
  13. 13. “S” Corporation Taxes: Pass-through taxation; ordinary income to shareholders. (Can “check the box” to be taxed as a “C” Corporation. Liability Protection: Shareholder liability limited to investment in the corporation. Corporate Formalities: Officers, annual meetings, records, etc. (Same as “C” Corporation) Several statutory requirements to be a stockholder. © 2012 Venable LLP13
  14. 14. “S” Corporation – Sources of Funding Bank lending – based upon creditworthiness of the Corporation. Third-party equity investment: Shares in the corporation may be sold to certain qualified third- parties. (Limits equity investments) © 2012 Venable LLP14
  15. 15. Limited Liability Company Taxes: Pass-through taxation; ordinary income to members. Liability Protection: Member liability limited to investment in the company. Corporate Formalities: Flexible No statutory requirements to be a member. *Entity of choice for most new businesses. © 2012 Venable LLP15
  16. 16. Limited Liability Company – Sources of Funding Bank lending – based upon creditworthiness of the Company. Third-party equity investment: Membership interests in the Company may be sold to third- parties. © 2012 Venable LLP16
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