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Organization
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Description
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Limited partnership (LP)
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A partnership in which one or more partners have limited liability as long as at least one partner (the general partner) has unlimited liability. The limited partners cannot take an active role in the firm's management; they are passive investors.
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S corporation (S corp)
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A tax-reporting entity that (under Subchapter S of the Internal Revenue Code) allows certain corporations with 75 or fewer stockholders to choose to be taxed as partnerships. Its stockholders receive the organizational benefits of a corporation and the tax advantages of a partnership. But S corps lose certain tax advantages related to pension plans.
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Limited liability corporation (LLC)
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Permitted in most states, the LLC gives its owners, like those of S corps, limited liability and taxation as a partnership. But unlike an S corp, the LLC can own more than 80% of another corporation, and corporations, partnerships, or non-U.S. residents can own LLC shares. LLCs work well for corporate joint ventures or projects developed through a subsidiary.
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Limited liability partnership (LLP) a
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A partnership permitted in many states; governing statues vary by state. All LLP partners have limited liability. They are liable for their own acts of malpractice, not for those of other partners. The LLP is taxed as a partnership. LLPs are frequently used by legal and accounting professionals.
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a In recent years this organizational form has begun to replace professional corporations--corporations formed by groups of professionals such as attorneys and accountants that provide limited liability except for that related to malpractice--because of the tax advantages it offers.
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