Corporation as One of the Most Convenient Business Entities Research Paper

Corporation as One of the Most Convenient Business Entities - Research Paper Example A limited liability company or LLC can be treated as a general partnership when there are two or more owners in a business enterprise. The State of Florida does not claim any formal documentation for the general partnerships. However, consultation with a legal counsel is recommended for the parties before forming any general partnership. This is significant in order to check on fraud considerations. In a similar manner to that of the US, the United Kingdom also observed a new legal form known as the limited liability partnership (LLP) in 2001. However, the UK LLP is not suitable for small trading business concerns. The LLP legislation in the UK is rather complicated. Even though it offers the possibility of tax reduction, it is not convenient due to the lack of tax neutrality. In the case of the US multiple-owner LLCs, the owners in general partnerships must use Schedule E with reporting their personal income tax returns. Besides, they require to file a partnership information return on Form 1065. This includes information on the source as well as the distribution of the money among the co-owners. The profit or loss earned in the business is shared equally by the owners. The State of Florida differentiates between a sole proprietorship and general partnership in terms of payment of the profit earned. Unlike a sole proprietorship, the profit earned in general partnership is not subject to Social Security and Medicare taxes. It is not liable to state and federal income taxes. Sole proprietorship, as well as general partnership, is a tax-reporting entity, not a tax-paying entity.