Help! Partnership or LLC for Small Business?

[wasowicz]

Hey Folks. I am starting a small wine label in California with a partner. The business will NOT have a production facility or tasting room (though, that could change in the next few years). We intend to simply purchase bulk wine on the market, bottle it and sell it vis internet/social media. I have read the basics on Partnership vs. LLC but still unsure which is best for us. Any thoughts to clear things up? Thanks so much for the help!

 

[LdiJ]

Hey Folks. I am starting a small wine label in California with a partner. The business will NOT have a production facility or tasting room (though, that could change in the next few years). We intend to simply purchase bulk wine on the market, bottle it and sell it vis internet/social media. I have read the basics on Partnership vs. LLC but still unsure which is best for us. Any thoughts to clear things up? Thanks so much for the help!

As far as tax purposes are concerned an LLC defaults to a partnership unless the members elect to be treated as an S-Corp. Therefore there is no difference between a partnership and an LLC for tax purposes...at least on the default level.

As far as liability and things of that nature are concerned, it would be best to consult a local attorney, particularly since you are going to be in an industry that requires a greater amount of licensing and oversight than many other industries.

 

[AdjunctFL]

I have read the basics on Partnership vs. LLC but still unsure which is best for us.

If you're asking about the tax consequences, there is no difference. A multi-member llc that has not elected to be taxed as a corporation or S-corporation is taxed as a partnership for federal tax purposes, and files a partnership return.

That same rule applies to most state taxes, but you don't mention the state. Some states may charge franchise fees on an llc that may or may not be charged a partnership.

 

[latigo]

Hey Folks. I am starting a small wine label in California with a partner. The business will NOT have a production facility or tasting room (though, that could change in the next few years). We intend to simply purchase bulk wine on the market, bottle it and sell it vis internet/social media. I have read the basics on Partnership vs. LLC but still unsure which is best for us. Any thoughts to clear things up? Thanks so much for the help!

So you read up on the basics, huh?

Then let me ask you whether you happened to discover that in a business partnership the personal assets of the individual partners are on the line for all debts of the business?

Or that a state of reciprocal agency exists among the partners allowing them to individually incur debts on behalf of the partnership and not necessarily with the consent or knowledge of the other partners; debts for which all general partners are jointly and severally liable? And not limited to contracted debts, but including tort liability! And once again personal assets can be charged.

With all due respect you either did not learn a blessed thing about the hazards of a business partnership or you are a complete fool for even contemplating a business venture so structured.

 

[LdiJ]

So you read up on the basics, huh?

Then let me ask you whether you happened to discover that in a business partnership the personal assets of the individual partners are on the line for all debts of the business?

Or that a state of reciprocal agency exists among the partners allowing them to individually incur debts on behalf of the partnership and not necessarily with the consent or knowledge of the other partners; debts for which all general partners are jointly and severally liable? And not limited to contracted debts, but including tort liability! And once again personal assets can be charged.

With all due respect you either did not learn a blessed thing about the hazards of a business partnership or you are a complete fool for even contemplating a business venture so structured.

And that helped the OP how?

 

[TigerD]

And that helped the OP how?

He pointed out a few of the risks inherent in a partnership.


TD

 

[davew128]

That same rule applies to most state taxes, but you don't mention the state.

I am starting a small wine label in California with a partner.

Second sentence. Kind of difficult to miss.