A 

limited liability company (LLC) is a popular business legal form, and it has
many similarities to the partnership legal form. But there are some differences
between an LLC and a partnership that you should consider before deciding
on which is better for your business. Keep reading to learn more about the
ways LLCs and partnerships are similar and different.

What Is an LLC?
A limited liability company (LLC) is a type of business legal entity that
combines the liability protection of a corporation with the operations of a
partnership.

An LLC can have one or more owners, called members. Each member has a
percentage of the equity (ownership) of the business. The members operate
the LLC following an operating agreement. The LLC members can turn over
day-to-day management to a hired manager or they can manage the business
themselves.

Note

LLCs are sometimes incorrectly called "limited liability corporations," but they
are not a type of corporation. An LLC may choose to be taxed as a
corporation or S corporation, but it continues to operate as an LLC.

What Is a Partnership?
A partnership is a business relationship between two or more people. Each
partner contributes to the business and has a percentage of the total business
equity. The partnership operates under a partnership agreement and day-to-
day administration may be handled by a managing partner.

Partnership and LLC Formation

The process of forming a partnership and an LLC is similar. Both are formed
by registering with the state in which the business wants to operate.

Forming a Partnership

Partnerships are registered with a state, and there can be several

different types of partnerships, depending on the profession of the partners
and the wishes of the owners for liability protection, management
responsibility, and investment. Unlike a corporation, which typically issues
stock, the partners share directly in the profits and losses of the business,
depending on their percentage interest.

Forming an LLC

Like a partnership, an LLC is formed in a specific state. The business

files articles of organization (known as a certificate of organization in some
states) with the secretary of state.1

Note

If you are thinking of forming a partnership, check with your state's business
division (usually in the secretary of state department). Some states don't allow
certain types of partnerships.

Debt and Legal Liability

The difference in liability protection is the single biggest difference between
partnerships and LLCs. All LLCs have this protection, but only some types of
partnerships do.

Liability in Partnerships

In a general partnership, each partner has personal liability for the debts of the
partnership because each partner actively participates in managing the
business. In addition, each partner has personal liability for the actions of all of
the other partners. General partnerships aren't common for this reason.2

Some types of partnerships have liability protection. Both a limited

partnership and a limited liability partnership have this protection (not
available in all states).3

Liability in LLCs

In contrast, an LLC is set up specifically to provide liability protection to its

members, which is why the term "limited liability" is used in the business
name. In most circumstances, LLC members are only liable for the debts of
the business entity to the extent of their personal investment.3

When LLC Members or Partners Can Have Personal Liability

There are some circumstances when LLC members or partners in a limited
partnership or limited liability partnership can have personal liability. These
cases are examples of "piercing the corporate veil," meaning breaking the
separation between the individual and the company, and making the company
liable for the actions of one or more of the members. These actions include:

 Combining personal and corporate assets

 Excessive control or misconduct (fraud or activities going beyond the
scope of the person's duties as a partner or member
 Mismanaging the affairs of the LLC4

Members and partners are also liable for specific debts of the business if they
personally sign to be responsible for those debts. For example, if an LLC
purchases a building, and an LLC member signs a personal guarantee for the
mortgage, the member is liable for the loan if the LLC can't pay. 

Income Taxes
Partnerships and LLCs are "pass-through" taxing entities, meaning for both
types of businesses, the income taxes are passed through to the owners
(partners or members) on their personal tax returns.

Taxes for Partners

A partnership files a partnership tax return every year on Form 1065, but no

tax is due by the partnership. Instead, a Schedule K-1 is given to each
partner, showing the amount of the partner's share of the profits or losses for
the year. Then, the partner files this Schedule K-1 as part of their personal tax
return.

Taxes for LLC Members

LLCs are not recognized by the IRS as a taxing entity. Single-member LLCs
are taxed in the same way as sole proprietors, filing a Schedule C as part of
their with their personal tax returns.

Multiple-member LLCs are taxed in the same way as partnerships, passing

through the income or loss to each member's personal tax return using the
Schedule K-1. LLCs may file an application with the IRS to be taxed as a
corporation or an S corporation. In this case, the LLC is still operated as an
LLC, not as a corporation. Partnerships don't have this tax option.
Records for LLCs and Partnerships
Unlike corporations, partnerships have no specific state requirements for
keeping records of partnership activities or minutes of partner meetings.

An LLC has some requirements to keep records and to hold meetings. Check
with your attorney to see what the requirements are for your state.

Frequently Asked Questions (FAQs)

Why would someone want a partnership instead of an LLC?

An LLC may be preferable to a general partnership because the LLC member

has limited liability when the general partners don't. Some states allow
individuals to form a limited liability partnership. In this type of business entity,
all partners are exempt from liability for the debts of the partnership and for
actions of other partners.3 Some professional firms (attorneys and CPAs, for
example) prefer the LLP form for this reason.

What's the difference between a limited partnership and a limited

liability partnership?

Limited partnerships have one person with unlimited liability; this person
usually has day-to-day control over the administration of the business. The
rest of the partners have limited liability. A limited liability partnership gives all
partners limited liability. In this case, the company hires someone to run the
business.3

How does an LLC or partnership compare to a corporation?

The most important difference in these types of businesses is in ownership

and how their ownership is taxed. Owners of corporations
are shareholders who receive shares of ownership and they may receive (and
be taxed on) dividends based on those shares.

LLC members and partners in partnerships, however, are considered self-

employed. This means they are subject to self-employment taxes (Social
Security and Medicare taxes) on their income from their business. Because
they don't receive paychecks or withhold taxes, they may need to
make quarterly estimated tax payments that include both income taxes and
self-employment taxes.
What Is a Fiduciary Duty? Examples and Types Explained
By 
ADAM BARONE

What Is a Fiduciary Duty?

Fiduciary duty refers to the relationship between a fiduciary and the principal
or beneficiary on whose behalf the fiduciary acts.

The fiduciary accepts legal responsibility for duties of care, loyalty, good faith,
confidentiality, and more when serving the best interests of a beneficiary.
Strict care must be taken to ensure that no conflict of interest arises to
jeopardize those interests.

KEY TAKEAWAYS

 A fiduciary duty involves actions taken in the best interests of another

person or entity.
 Fiduciary duty describes the relationship between an attorney and a
client or a guardian and a ward.
 Fiduciary duties include duty of care, loyalty, good faith, confidentiality,
prudence, and disclosure.
 It has been successfully argued that an employee may have a fiduciary
duty of loyalty to an employer.
 A breach of fiduciary duty occurs when a fiduciary fails to act
responsibly in the best interests of a client.
0 seconds of 1 minute, 28 secondsVolume 75%
 

1:28
How the Fiduciary Rule Can Impact You

Examples of Fiduciary Relationships

Trustee/Beneficiary
A single parent with young children might create a trust to administer the
assets that the children would inherit should the parent die while the children
are still underage.

In this case, the parent will name a person or an entity, such as a law firm or
bank, as trustee of the estate. That person or entity has a fiduciary duty to the
children, who are the beneficiaries of the estate.

In a trustee/beneficiary relationship, the fiduciary (trustee) has legal

ownership of the property and controls the assets held in the trust.

As fiduciary, the trustee must make decisions that are in the best interest of
the beneficiary as the latter holds equitable title to the property.

The trustee/beneficiary relationship is an important aspect of

comprehensive estate planning. Special care should be taken to determine
who is designated as trustee.

Guardian/Ward

In a guardian/ward relationship, an adult is designated as the legal guardian

of a minor child. The guardian, as the fiduciary, is tasked with ensuring that
all matters related to the daily welfare of the child are dealt with responsibly
and in the best interests of the child. This care can include such things as
deciding where the child will attend school, arranging for health care, and
providing an allowance.

A guardian may be appointed by a state court when a parent dies or is unable

to care for the child for other reasons. In most states, the guardian/ward
relationship remains intact until the minor child reaches adulthood.

Agent/Principal

Any person, corporation, partnership, or government agency might be called

upon to act as agent without conflict of interest on behalf of a principal.

A common example of an agent/principal relationship that implies fiduciary

duty is that between the executives of a company and its shareholders. The
shareholders expect that the executives will make well-considered, prudent
decisions on their behalf and in their best interests as owners.
A similar fiduciary relationship exists between personal investors and the fund
managers they select to manage their assets.

Attorney/Client

The agreement between an attorney and a client is arguably one of the most
stringent of fiduciary relationships.

The U.S. Supreme Court has stated that the highest level of trust and
confidence must exist between an attorney and a client. An attorney, as a
fiduciary, must act with fairness, loyalty, care, and within the law on behalf of
the client.

Attorneys can be sued for breaches of their fiduciary duties by clients. They
are accountable to the court in which a client is represented when a breach
occurs.

Controlling Stockholder/Company

In certain circumstances, fiduciary duties may be required of a stockholder

who possesses a majority interest in a corporation or who exercises control
over its activities. A breach of fiduciary duty may result in personal legal
liability for the controlling shareholder as well as directors and officers.

 
The adjective fiduciary means held or given in trust. A fiduciary commits to
acting in the best interests of a principal or beneficiary.

Types of Fiduciary Duties

Fiduciary duties may differ depending on the type of beneficiary that a
fiduciary serves. However, in general, the legal and ethical obligations related
to protecting the interests of beneficiaries include the following duties.

Duty of Care

This is the responsibility to inform oneself as completely as possible in order

to exercise sound judgments that protect a beneficiary's interests. It can
involve the thoughtful consideration of options and sensible decision-making
that's based on a careful examination of available information.
Duty of Loyalty

This pertains to acting in the best interest of the beneficiary at all times,
putting their well-being first and foremost. It includes the duty of the fiduciary
to excuse themself from taking actions when there's a conflict of interest with
the beneficiary's welfare.

Duty of Good Faith

This duty pertains to always acting within the law to advance the interests of
the beneficiary. At no time should the fiduciary take actions that are outside of
legal constraints.

Duty of Confidentiality

A fiduciary must maintain the confidentiality of all information relating to the

beneficiary. They must not use any form of it, whether written or spoken, for
their personal gain.

Duty of Prudence

Fiduciaries must administer matters and make decisions concerning the

interests of beneficiaries with the highest degree of professional skill, caution,
and critical awareness of risk.

Duty to Disclose

Fiduciaries must engage in completely forthright behavior, disclosing any and

all relevant information that could have an impact on their ability to carry out
their duties as fiduciary and/or on the well-being of a beneficiary's interests.

Breaches in Fiduciary Duty

Fiduciary duties are taken on by individuals and entities for various types of
beneficiaries. Such relationships include, among others, lawyers acting for
clients, company executives acting for stockholders, guardians acting for their
wards, financial advisers acting for investors, and trustees acting for estate
beneficiaries.

An employee may even have a fiduciary duty to an employer. That is,

employers have a right to expect that employees are acting in their best
interests. For example, they are not sharing trade secrets, or using company
equipment for private purposes, or stealing customers from a competitor.

These expectations may not be actual fiduciary duties but they may be
spelled out in an employee handbook or contract clause.

Case law indicates that breaches of fiduciary duty most often happen when a
binding fiduciary relationship is in effect and actions are taken which violate
or are counterproductive to the interests of a specific beneficiary.

Typically, the inappropriate actions are alleged to have benefitted the

fiduciary's interests or the interests of a third party instead of a principal's or
beneficiary's interests. In some cases, a breach stems from a fiduciary's
failure to provide important information to a client, which leads to
misunderstandings, misinterpretations, or misguided advice.

Disclosure of any potential conflict of interest is important in a fiduciary

relationship because any conflict can be seen as a cause for a breach of trust

Consequences of a Fiduciary Breach

A breach of fiduciary duty can lead to a number of consequences. Not all of
them are legal consequences.

1. An accusation of a breach of fiduciary duty can hurt the reputation of a

professional. A client can end a professional relationship because they
do not trust in a professional’s care of the required fiduciary duty.
2. If a breach of duty case proceeds to the courts, steeper consequences
can result. A successful breach of fiduciary duty lawsuit can result in
monetary penalties for direct damages, indirect damages, and legal
costs.
3. A court ruling can also lead to industry discrediting, the loss of a
license, or removal from service.

However, proving a breach of fiduciary duty is not always easy.

Elements of a Fiduciary Breach Claim

A number of legal precedents and elements have been established to allow
claims by those who have been harmed by a breach of fiduciary duty.
Jurisdictions differ, but in general, the following four elements are essential if
a plaintiff is to prevail in a breach of fiduciary duty claim.
A Duty Existed

The plaintiff must show that a legal fiduciary duty existed. Many professionals
are obligated, legally and ethically, to conduct their businesses honestly.
However, that doesn't mean that they are fiduciaries who must act solely in
the interest of a particular client. A fiduciary duty is accepted as such by a
fiduciary, typically in writing.

A Breach Occurred

The plaintiff must show that a fiduciary duty was breached. The type of
breach varies in every case. For example, if an accountant was sloppy in
filling out a client's tax returns, and the client was slapped with an enormous
fine for nonpayment, the accountant may be guilty of a breach of fiduciary
duty. However, if the client was sloppy and failed to provide complete and
necessary information, no breach occurred.

Damage Was Sustained

The plaintiff must show that the breach of trust caused actual damage.
Without damage, there is usually no basis for a breach of fiduciary duty case.
The more specific a principal or beneficiary can be with facts of damage, the
better.

For example, a trustee might be sued for selling a beneficiary's property too
cheaply. If the buyer is a relative of the trustee, it's clearly a conflict of
interest. However, a specific accounting relating to the loss to the beneficiary
is needed to prove a breach of fiduciary duty.

Causation Was Proved

Causation shows that any damages incurred by the plaintiff were directly
linked with the actions taken in breach of fiduciary duty. In the above example
of a property sale, the link appears to be clear. However, the trustee might
argue that a quick sale was in the best interest of the beneficiary and that no
other buyer was interested.

 
If you suspect your financial adviser is in breach of their fiduciary duty, you
can file a complaint with FINRA, the SEC, or both. If your adviser has a
professional certification, you can also notify the entity that provided the
credential.
Examples of Fiduciary Breach Cases
A Duty of Loyalty

One example of a breach in fiduciary duty case went to the Virginia Supreme
Court in 2007.

In "Banks v. Mario Industries of Virginia, Inc." a lighting manufacturer and

supplier sued a former employee for establishing a directly competing
business by allegedly using proprietary information acquired in their previous
employment.

The manufacturer did not require its employees to sign a non-compete or

confidentiality clause, although the company handbook outlined related
policies.

In this case, the question of whether the employees had a fiduciary duty to
their former employer, and breached it, was fundamental to the appeal that
brought the case to the state's highest court.

The court affirmed the lower court's ruling that the employees owed Mario a
duty of loyalty. In effect, it supported the claim of a breach of fiduciary duty,
and a penalty of more than $1 million.1

A Menswear Store vs. Ex-Employees

In 2006, a high-end menswear store cited a breach of fiduciary duty when it

sued two of its former sales professionals for taking a job with a competitor,
Saks Fifth Avenue. The department store was able to prove that it suffered
actual losses after the salesmen left.

However, the court ruled that the losses could not be attributed directly to the
actions of its former employees. The suit failed.

Aiding and Abetting a Breach of Duty

A comptroller for a corporation embezzled $15 million from his employer by

writing checks against his company's bank account and depositing them into
another account at his own bank.
The company sued the bank that took the deposits, alleging that it aided and
abetted a breach of fiduciary duty. The court ruled that there was insufficient
evidence that the bank was aware of its role in the scam.

What Does It Mean to Have a Fiduciary Duty?

The adjective fiduciary means held or given in trust. In accepting a fiduciary
duty, an individual or entity accepts a legal commitment to act in the best
interests of a beneficiary.

What Are the Main Fiduciary Duties?

There are several types of fiduciary duties. One is the duty of loyalty which
implies that the fiduciary will always act in the best interests of the beneficiary
or principal. Duty of care is another. It means that a fiduciary will take special
care to make sound, sensible decisions regarding a beneficiary's well-being.
No conflicting interest will be permitted to influence the fiduciary's actions on
behalf of the client. Duty to disclose is a third. It refers to the duty a fiduciary
has to disclose any conflict of interest they may have when acting on behalf
of a beneficiary.

What Are Some Examples of Fiduciary Relationships?

The most common fiduciary relationships involve legal or financial
professionals who agree to act on behalf of their clients. For example, a
lawyer and a client have a fiduciary relationship. So do a trustee and a
beneficiary, a corporate board and its shareholders, and an agent acting for a
principal.

However, any individual may, in some cases, have a fiduciary duty to another
person or entity. For example, an employee may be found to have a duty of
loyalty to an employer and may be legally liable if they cause harm to the
employer by misusing information or resources entrusted to them.

What Does It Mean to Be a Fiduciary?

A fiduciary is entrusted with the authority to act on behalf of another person or
entity and has the legal and ethical obligation to act in the best interest of
them. A fiduciary agrees to put a beneficiary's interest above their own.

The Bottom Line

Fiduciary duties refer to the ways that a fiduciary is legally committed to act
for a principal or beneficiary. They include a duty of loyalty, a duty of care, a
duty of prudence, a duty of confidentiality, and more.

Fiduciary duties are meant to ensure that the fiduciary acts only in the best
interests of a principal or beneficiary. What's more, the fiduciary must act
diligently to protect those interests.

While you should always expect a high standard of care from a fiduciary, you
can protect yourself by understanding the rights that this relationship grants
you and the responsibilities that are not part of a fiduciary's duties. 

2. Các nghĩa vụ của người quản lý công ty theo quy định của Luật
Doanh nghiệp năm 2020

Trong các người quản lý của công ty, Luật Doanh nghiệp năm 2020 đặc biệt
chú ý đến người đại diện theo pháp luật của doanh nghiệp. Theo quy định tại
Điều 13, Luật Doanh nghiệp năm 2020, người đại diện theo pháp luật của
doanh nghiệp có trách nhiệm sau đây:

a) Thực hiện quyền và nghĩa vụ được giao một cách trung thực, cẩn trọng, tốt
nhất, nhằm bảo đảm lợi ích hợp pháp của doanh nghiệp;

b) Trung thành với lợi ích của doanh nghiệp; không lạm dụng địa vị, chức vụ
và sử dụng thông tin, bí quyết, cơ hội kinh doanh, tài sản khác của doanh
nghiệp để tư lợi hoặc phục vụ lợi ích của tổ chức, cá nhân khác;

c) Thông báo kịp thời, đầy đủ, chính xác cho doanh nghiệp về doanh nghiệp
mà mình, người có liên quan của mình làm chủ hoặc có cổ phần, phần vốn
góp theo quy định của Luật Doanh nghiệp.

Ngoài ra, người đại diện theo pháp luật của doanh nghiệp chịu trách nhiệm cá
nhân đối với thiệt hại cho doanh nghiệp do vi phạm trách nhiệm theo quy định
trên.

Đối với những vị trí quản lý khác như: chủ doanh nghiệp tư nhân, thành viên
hợp danh, Chủ tịch Hội đồng thành viên, thành viên Hội đồng thành viên, Chủ
tịch công ty, Chủ tịch Hội đồng quản trị, thành viên Hội đồng quản trị, Giám
đốc hoặc Tổng giám đốc và cá nhân giữ chức danh quản lý khác theo quy
định tại Điều lệ công ty, Luật Doanh nghiệp năm 2020 cũng quy định về trách
nhiệm của người quản lý tương tự như đối với người đại diện tại các điều:
Điều 71; Điều 83; Điều 97; Điều 107; Điều 165; Điều 173. Cụ thể gồm các
nghĩa vụ sau:

Thứ nhất, thực hiện quyền và nghĩa vụ một cách trung thực, cẩn trọng, tốt
nhất nhằm bảo đảm lợi ích hợp pháp tối đa của công ty. Mặc dù Luật Doanh
nghiệp và các văn bản hướng dẫn thi hành không giải thích thế nào là trung
thực, là cẩn trọng, nhưng có thể hiểu: (1) Nghĩa vụ trung thực đòi hỏi những
người quản lý phải hành động một cách thẳng thắn, thành thực, không có sự
gian dối trong mọi hoạt động của mình. (2) Nghĩa vụ cẩn trọng theo Hamilton
(người Mỹ), có nghĩa khi thực hiện chức vụ của mình, người quản lý công ty
cần phải: a, Có thiện chí; b, Thực hiện chức vụ như một người có thận trọng
bình thường sẽ làm trong trường hợp tương tự; c, Với phương thức thích
đáng, họ có lý do tin tưởng rằng đó là phương thức tốt nhất phù hợp với lợi
ích công ty[4]. (3) Nghĩa vụ thực hiện công việc một cách tốt nhất nhằm bảo
đảm lợi ích hợp pháp tối đa của công ty cho thấy rằng, người quản lý phải suy
đoán thận trọng các phương án và lựa chọn được các phương án tối ưu nhất
khi thực hiện công việc của công ty.

Thứ hai, người quản lý có nghĩa vụ trung thành với lợi ích của công ty; không
lạm dụng địa vị, chức vụ và sử dụng thông tin, bí quyết, cơ hội kinh doanh, tài
sản khác của công ty để tư lợi hoặc phục vụ lợi ích của tổ chức, cá nhân
khác. Lý thuyết về đại diện đã giải thích rất rõ trong quan hệ đại diện giữa
người chủ và người quản lý rất dễ xảy ra vấn đề xung đột lợi ích. Trong
trường hợp này, người quản lý có thể không lựa chọn hành động vì lợi ích
của công ty, mà lại hành

động vì lợi ích cá nhân. Khi người quản lý trục lợi từ công ty thì họ đã vi phạm
nghĩa vụ trung thành. Khác với những người lao động khác trong công ty,
người quản lý là người nắm những vị trí, chức vụ quan trọng. Trong quá trình
đó, người quản lý có cơ hội tiếp cận với những thông tin, bí quyết, cơ hội kinh
doanh và tài sản của công ty. Bởi vậy, nếu người quản lý không trung thành
với lợi ích của công ty, lợi dụng địa vị, chức vụ của mình để sử dụng những
thông tin, bí quyết, cơ hội kinh doanh, tài sản của công ty sai mục đích, nhằm
trục lợi thì sẽ gây thiệt hại rất lớn cho công ty.

Thứ ba, người quản lý có nghĩa vụ thông báo kịp thời, đầy đủ, chính xác cho
công ty về doanh nghiệp mà mình làm chủ hoặc có cổ phần, phần vốn góp và
doanh nghiệp mà người có liên quan của mình làm chủ, cùng sở hữu hoặc sở
hữu riêng cổ phần, phần vốn góp chi phối. Như vậy, việc xác định được
người liên quan của công ty (hay cá nhân, tổ chức có quan hệ trực tiếp hoặc
gián tiếp với công ty) là vô cùng quan trọng, nhằm kiểm soát những hành vi
trục lợi của người quản lý có thể diễn ra.

Thứ tư, Luật Doanh nghiệp năm 2020 cũng có quy định mở nhằm tạo điều
kiện cho công ty tự chủ trong việc xác định các nghĩa vụ của người quản lý
theo Điều lệ công ty. Theo quy định này, các doanh nghiệp có quyền xác định
cụ thể hơn các nghĩa vụ đối với từng vị trí mà người quản lý đảm nhiệm. Bởi,
mỗi công ty đều có cơ cấu tổ chức, hoạt động mang những đặc điểm đặc thù
riêng, việc trao quyền cho các công ty xác định cụ thể các nghĩa vụ khác của
người quản lý là vô cùng quan trọng, giúp cho công ty nâng cao trách nhiệm
của người quản lý cũng như hoạt động quản trị của công ty.

Thứ năm, ngoài các nghĩa vụ trên của người quản lý, Luật Doanh nghiệp năm
2020 cũng quy định rất rõ trách nhiệm của người quản lý trong công ty cổ
phần khi họ vi phạm nghĩa vụ của người quản lý. Theo đó, “thành viên Hội
đồng quản trị, Giám đốc hoặc Tổng giám đốc và người quản lý khác vi phạm
quy định tại khoản 1 Điều này chịu trách nhiệm cá nhân hoặc liên đới đền bù
lợi ích bị mất, trả lại lợi ích đã nhận và bồi thường toàn bộ thiệt hại cho công
ty và bên thứ ba”[5]. Đây cũng là một trong những điểm mới quan trọng của
Luật Doanh nghiệp năm 2020 so với Luật Doanh nghiệp năm 2014.

Như vậy, về cơ bản, Luật Doanh nghiệp năm 2020 đã có những sửa đổi, bổ
sung nhằm nhận diện chính xác, đầy đủ hơn về người quản lý trong công ty,
cũng như các nghĩa vụ của người quản lý. Tuy nhiên, so với các Luật Doanh
nghiệp trước, Luật Doanh nghiệp năm 2020 đã không mở rộng phạm vi người
quản lý trong công ty. Đặc biệt, một số vị trí, chức vụ rất quan trọng trong
công ty như: Kế toán trưởng, Phó Giám đốc/Phó tổng Giám đốc; Trưởng văn
phòng đại diện; Trưởng chi nhánh không được Luật Doanh nghiệp năm 2020
quy định là người quản lý[6].

Luật Doanh nghiệp cũng quy định mở dành cho Điều lệ công ty xác định các
người quản lý khác của công ty. Bởi vậy, khi nhận diện người quản lý trong
công ty, Điều lệ công ty cần lưu ý quy định cụ thể hơn đối với các vị trí, chức
danh người quản lý của công ty. Ngoài ra, trong hoạt động quản trị công ty,
cần lưu ý đến các nghĩa vụ cụ thể đối với từng vị trí quản lý để mô tả công
việc và quy định trách nhiệm của người quản lý rõ ràng hơn.

Article 13. Responsibilities of the enterprise’s legal representative

1. An enterprise’s legal representative shall:

a) Exercise and perform his/her rights and obligations in an honest and
prudent manner to protect the enterprise’s lawful interests;

b) Be loyal to the enterprise’s interests; not abuse his/her power and position
or use the enterprise’s information, secrets, business opportunities and
assets for personal gain or serve any other organization’s or individual’s
interests;

c) Promptly and fully provide the enterprise with information about the
enterprises that he/she or his/her related person owns or has shares/stakes
in as prescribed in this Law.

2. The enterprise’s representative shall be personally responsible for any

damage to the enterprise within the limits of responsibilities specified in
Clause 1 of this Article.

Corporations, LLCs, and Limited Liability

Both corporations and LLCs limit the liability of the investors (owners and
shareholders) from the debts of the business and against lawsuits against the
business. The concept of limited liability is usually expressed by stating that
liability is limited to the extent of the person's investment.1

Both business types must work to keep their operations separate from the
activity of the owners to maintain their liability protection. This is called the
"corporate veil," meaning that there is a separation between the liability of the
business and the liability of the owners. If a court finds that the operations are
not separate, the owners or shareholders can be personally liable for the
actions or debts of the business.2

First Difference - How the Business is Formed

Business organizations (not including sole proprietors) must register as a
specific business type with the state where they do business. All states
recognize businesses formed as corporations, limited liability
companies (LLCs) or partnerships, or variations of these forms.

Forming an LLC. An LLC is formed by one or more business people, as

owners. The owners, called "members," file Articles of Organization with a
state. Then they put together a contract called an Operating Agreement to use
in managing the day-to-day activities and decide on each member's
percentage share of ownership.

Forming a Corporation. A corporation is formed (incorporated) by filing

corporate organization documents (Articles of Incorporation or similar) in the
state where the corporation is located. The corporation also creates a Board
of Directors to oversee the corporate business and the board agrees
on bylaws (operating documents).

Second Difference - Business Ownership

LLC's and corporations both have owners, but the form of ownership is
different.

LLC members have an equity (ownership) interest in the assets of the

business because they have made an investment to join the business.

Corporate owners are shareholders or stockholders who have shares of

stock in the business.

Note

How you are paid - and taxed - as an owner of an LLC or a corporation could
be a major factor in determining which form of business you choose.

Third Difference - Profits and Losses

The profits and losses of an LLC and a corporation are handled differently.
LLC profits and losses are passed through to individual owners, while
corporate profits and losses are held by the corporation.

LLCs as Pass-through Businesses. Limited liability companies, like

partnerships and sole proprietorships, are pass-through entities. Pass-through
businesses are those in which the profits and losses of the business pass
through to the owners or shareholders. The owners pay their share of the
company's profits on their personal tax return (Form 1040 or 1040-SR).

Corporations as Separate Business Entities. Corporations are separate

from the owners. The corporation pays income taxes on its profits or losses,
not by the owners directly. Some of the corporation's earnings may be paid to
the owners in dividends, but this isn't direct. Some earnings may be kept by
the corporation.

Fourth Difference - LLC and Corporate Income

Taxes
Corporations and LLCs pay income taxes differently. Both entities pay tax on
their profits for the year, called net income for an LLC and net earnings for a
corporation.

Corporate Income Taxes

Corporations are taxed at the corporate tax rate, currently 21%.3

Shareholders of corporations pay tax on dividends when they receive them.

Note

Corporations are sometimes said to have double taxation because the

corporation is taxed on its net earnings and the shareholders are taxed on the
dividends from those net earnings.

LLC Income Taxes

Owners of an LLC are taxed like partners in a partnership; that is, they receive
a distributive share of the profits each year and pay taxes on that share on
their personal tax returns (that pass-through concept discussed above).

For example, if the LLC's net income is $120,000, the members split up the
income between them based on their operating agreement. Two owners with
equal shares in the business would each pay income tax on $60,000 of net
income.

The owner of a single-member LLC reports the business income tax

on Schedule C of their personal tax return. Members of a multiple-member
LLC receive a Schedule K-1 showing their share of the business income, and
they report this income on their personal tax return.

Fifth Difference - Self-Employment Taxes

LLC owners are considered to be self-employed and they must pay self-
employment taxes (Social Security and Medicare tax) on their share of the
LLC's profit each year.4

Corporate shareholders aren't self-employed so they don't have to pay this

tax. Corporate owners who also work as employees have Social Security and
Medicare tax taken from their paychecks.

Limited Liability Company vs. Corporation

Limited Liability Company (LLC)
Has limited liability  Has limited liability
Formed by state filing Articles of Organization
Owners are called members
LLC doesn't pay income taxes
Members pay LLC taxes on personal tax return
(Form 1040 or 1040-SR)
Members pay self-employment taxes
Corporation
Formed by state filing Articles of
Incorporation
Owners are called shareholders
Corporation pays income taxes
Shareholders pay taxes on
dividends received
Shareholders don't pay self-
employment taxes

A Third Possibility - An LLC Taxed as a

Corporation
You might want to consider forming an LLC and then electing to have the LLC
taxed as a corporation or S corporation. The S corporation is not formed
separately; it's a tax status. It combines the simplicity of the LLC with the tax
benefits of a corporation. You would first need to form the LLC in the usual
way, then make the election.

Your LLC can elect to be classified as a corporation by completing an election

form, Form 8832, and filing it with the IRS. If your LLC wants to be classified
as an S corporation, file Form 2553.5

To have your LLC taxed as a corporation or S corporation doesn't change the

way your LLC does business or how the company is organized as a legal
entity; it just changes the way taxes are paid.
There are some regulations and restrictions on filing this election, and it must
be completed within a specific time, so get help from your attorney to make
sure it's done correctly.