Limited Partnerships: This type of organization is identified in its name with the words “Limited
Partnerships” or “Ltd” or “LP”. A Limited partnership has two classes of partners, general and limited. At
least one partner must be a general partner, who assumes management duties and unlimited liability for
the debt of the partnership. The Limited partners have no personal liability beyond the amounts they
invest in the partnership. Limited partners have no active role except as a specified in the partnership
agreement. A limited partnership agreement often specified unique procedures for allocating income
and losses between general and limited partners. The accounting procedures are similar for both limited
and general partnership.
S Corporations: Corporations with 100 or fewer stockholders can elect to be treated as a partnership for
income tax purposes. This provides stockholders the same limited liability feature that C corporations
do. The advantage of an S corporation is that it does not pay income taxes. If stockholders work for an S
