2. Business Entities

What this video covers

• Why every business entity is judged on two axes: limited versus unlimited liability, and pass-through versus double taxation
• How general partnerships form with no state filing, impose unlimited personal liability on all partners, and allow any partner to bind the business
• The limited partnership (LP) split of roles: general partner manages with unlimited liability, limited partner invests with liability capped at their contribution
• Why a limited partner loses liability protection if they participate in management, and how this differs from limited liability company (LLC) rules
• How an LLC gives members limited liability plus active-management rights without sacrificing that protection, and its default pass-through tax flexibility
• Why C-corporations are the only entity automatically subject to double taxation: corporate tax on profits, then personal tax on dividends
• How S-corporations avoid double taxation with pass-through treatment but face strict limits of 100 shareholders, one class of stock (voting differences permitted), and US individual ownership requirements
• Who has legal authority to open or bind the investment account for each entity type