Corporations, limited liability companies (LLCs), and partnerships are different types of business arrangements with unique qualities. One thing they all have in common, however, is the potential for a dispute amongst members that could compromise the business’ success, or that seriously disadvantage a shareholder, member or partner which they seek to remedy through litigation or arbitration.
What Is a Corporation?
A corporation is an entity that is able to exist independent of its owners. In corporations, shareholders may transfer stock or their interest in ownership freely, with no restrictions on their actions.
Additionally, the members of a corporation are not legally liable for any damages the corporation causes. In order to establish a corporation, founders must create bylaws and hold regular meetings and record minutes.
What Is an LLC?
A limited liability company is a fusion of partnerships and corporations. It is not as formal as a corporation, in that it does not require bylaws, meetings, or a certain number of members if comprised of more than one member, must have a company agreement. LLCs have their downsides, as well. Members often cannot withdraw from the LLC or sell their interests without the unanimous consent of the other members. If the membership of an LLC disbands, the business will likely be dissolved, whereas corporations can endure. Similar to a corporation, however, members of an LLC are not personally liable for any of their business’ shortcomings or failures.
What is a Partnership?
A business shared between two owners who split profits is called a partnership. While they may not be taxed as heavily as the members of a corporation, they may be exposed to greater liability.
Business disputes can have a profound effect on the success of a company. When members disagree, investments may be withdrawn as a result. To protect the interests of a business and all of its members, disputes should be approached cautiously. In some cases, the assistance of a business attorney may be necessary.
To learn more about corporations, partnerships, and limited liability companies, or for business dispute mediation, contact the corporation, LLC, & partnership dispute attorneys at the Burk Law Firm, P.C. by calling 512-306-9828 today.