Part A Sole Proprietorship: A type of business that is owned by and run by one person with no legal difference between the business and the owner. It is easy to form with no cost or time to initiate. It gives the owner the ability to self-govern the business. There are drawbacks; only one owner can be established not allowing a partner. Also, unlimited liability puts the owner’s personal assets in jeopardy with the creditors. · LIABILITY – The owner is held responsible for all debts and expenses accrued by the company via the concept of unlimited liability. If the expenses and debts aren’t satisfied, the owner of the business can be sued for breach of contract. · INCOME TAXES – The IRS views all income generated by the business as …show more content…
· PROFIT RETENTION – All losses and profits are shared equally, unless their agreement states otherwise. · LOCATION – Texas mandates that if a partnership is doing business under a name that doesn’t include the surnames of the partners; an assumed name certificate must be filed in the same county as the business premise. In the event, there is no set premise for operations; an assumed name certificate has to be filed in all counties of operation. ("Selecting a business," 2012) · CONVENIENCE or BURDEN – General partnerships are easy to establish and dissolve. All partners share gains, losses, and all liabilities. Limited Partnership: This partnership consists of a blend of both general and limited partners. This kind of agreement/partnership lets the general partner manage the entire operation, but they are still fully liable for debts. The limited partner only invests his/her money, and can only lose what they invested. · LIABILITY – The general partner has unlimited liability, while the limited partner is typically liable for the investment that he contributes. · INCOME TAXES – This partnership is not subject to federal income tax. All earned and lost income from this business is taxable on the individual’s tax return. · LONGEVITY/CONTINUITY –If the general partner dies or withdraws then the business is liquidated unless there was a buy/sell agreement stating otherwise. In the event that the limited partner perishes his appoint heir
| A general partnership allows for a pooling of capital and talent and a sharing of the risk. Additional benefits to a general partnership include additional expertise in decision making and a sharing of the workload. General partnerships are easy and inexpensive to start up.
Limited liability means it does not exceed the amount invested in a partnership or limited liability company. The limited liability feature is one of the biggest advantages of investing in publicly listed companies. While a shareholder can participate wholly in the growth of a company, his or her liability is restricted to the
partnership is having the addition of outside fund while not losing control of the company. While you have invested as a limited partner, it does not give you any say on how the company should be ran. C-CORPORATION: Corporations are defined as a group of people authorized to act as a single entity which is recognized under state/corporate laws. A corporation is treated like a “person” and has the same rights as you or I except it is not protected by Fifth Amendment rights.
Many believe that liability is a biggest issue in a general partnership than in a sole proprietorship. The owners of the company are still fully liable for any debts the company may accrue as well as the liability for any lawsuits that may be brought against the company. However, the bigger issue in a partnership is that now each partner can be liable for the other partner’s actions. If one partner is sued for malpractice, the other partner may suffer because of it.
When it comes to partnerships Alex, Bill, Carl, and Devon will have two options- a general partnership or a limited partnership. Partnerships are beginning to be a business form of the past. Once upon a time, partnerships were “the default form of business and provided the benefit of pass-through taxation, but lacked the important feature of limited liability” (Chrisman, 2010, p. 465). In a general partnership, each partner associated with the entity will be held liable for their own business decisions as well as
Why is the fiduciary duty between the general partner and limited partners even greater than the fiduciary duty between partners in a general partnership?
Without a partnership agreement, loss of income and profits are split between partners that wish. The partners then report individual amounts divided in their tax returns, pay taxes accordingly. Gains and losses are passed directly to shareholders, with each LLP partner personally liable only for its own negligence or the negligence of an employee who is under the direct supervision of the partners. The other
34. The limited liability provided to limited partners means that they are not responsible for the debts of the business
SOLE PROPRIETORSHIP: Has only one owner. Easy to start up. Some of the advantages are: owners may do whatever they want to with the business and if they want to go on vacation they can. One of the disadvantages they cannot bring in another person to help run the business. This business form is particularly common.
Liability- The general partner would be liable for all unlimited responsibility on all tasks and debt, while the limited partner will not loss more than their investment.
PROFIT RETENTION- The company’s profit can be used in two ways. The profit can either be invested in the business or it will be paid out to the shareholders as dividends. Dividends are based upon on the shareholders stake.
This is typically determined by how much money each limited partner is investing in the company.
* Limited Liability - Unlike partnerships and sole proprietorships, corporate shareholders are not liable for any of the corporation's debts.
Limited partnership: Owners are distinguished as either general or limited partners. Limited partners are only liable about their contribution to the partnership involving funds, equipment and other property.
Longevity: Similar to a sole proprietorship, in case of death or incapacity of a partner the