Legal Questions Assignment
Use your book and the Internet to answer the following questions, remember to include the
question with your answer.
1. What are three fundamental differences between a general partnership and a limited partnership?
In a general partnership, all of the partners have the ability to actively manage or control the business. They
have equal authority. A limited partnership has both limited and general partners. A limited partner does not
have total responsibility for the debts of the partnership and does not have authority to run the business.
They have limited liability, where general partners have unlimited liability. Limited partners are not involved
in the company’s daily operations and don’t participate in management meetings, where a general partner
does.
2. What are three fundamental differences between a C Corporation and an S Corporation?
The main difference is taxes. C corporations pay taxes on their income and your personal income. S
corporations don’t pay tax. They report the company’s revenue as personal income. Another difference is
formation. C corporations file articles of incorporation in your state. S corporations file form 2553 and have to
complete other forms to stay an S corporation. Another difference is ownership. C corporations don’t have
restrictions on ownership. Anyone can be an owner and there can be multiple owners. S corporations can
have up to 100 shareholders and all must be U.S. citizens.
3. Why is the issue of limited personal liability so important for an independent restaurateur?
Limited liability is a type of legal structure to help protect the owners and investors. The owner’s or investor’s
personal assets are not at risk if the restaurant fails. It’s what makes investing in public listed companies a
