Formation of a Partnership
What is a partnership? A business owned by two or more
individuals
What is are the Articles of CoPartnership?
A written
... [Show More] agreement the partners
governing the nature and terms of the
partnership contract
What are the principals in the
agreements?
1. Name of the Partnership
2. The names addresses of the partners
3. Effective date of the contract
4. Purpose and principle place of
business
5. The Investments each partner will make
in the business
6. Rights and duties of each partners
7. Allocation and distribution of
profit/losses
8. Conditions under which the partners
may withdraw money / assets
9. Manner of keeping the books of
accounts
10. method of decision making
What are the characteristics of a
Partnership? 1. Based on contract
2. Voluntary association
3. Mutual agency
4. Limited life
5. Unlimited Liability
6. Co-ownership of Property
7. Co-ownership of Profit
8. Legal Entity
9. Income Tax
What does it mean a partnership has to
be "based on contract?
mutual agreement, may be written or oral
What does "voluntary association"
mean?
no one is forced
What is the definition of "mutual
agency"?
partner may act as an agent in conducting
its affairs
What does "limited life" characteristic
mean?
may be dissolved by actions of the
partners or by operation of law, any
change/incapicity in partnership will
dissolve the partnership
What does it mean to have "unlimited
liability"?
the personal assets of a general partner
may be used to pay for the claims of the
creditors if the partnership assets are not
enough to pay for the company's liabilities
What does "co-ownership of property"
mean?
properties contributed to the partnership
are owned by the partnership, not
personal property anymore
What does "co-ownership of profit"
mean?
a partner has the right to share in
partnership profits as a return of their
investment
What is a "legal entity"? a partnership has a legal personality
separate and distinct from that of each of
the partners
What does income tax have to
contribute to the partnership?
Partnerships are subject to income tax
rate of 30% beginning the fiscal year with
the exception of general professional
partnerships
What are the advantages of a
partnership?
- it is easy and inexpensive to
form/dissolve
- greater amount of capital can be raised
- relative freedom/flexibility in decisionmaking
- better managed because more than one
person supervises the business
- unlimited liability of general partners
make it lesk risky for the creditors
What are the disadvantages of a
partnership?
- lack of business continuity
- limited amount of capital
- general partner may subjected to
personal liability
- likelihood of disagreement
- difficulty in transferring ownership
What are the different kinds of
partnerships according to activities?
Service, Merchandising/Trading,
Manufacturing
What is a service partnership? main activity is the rendering of services
What is a merchandising/trading
partnership?
main activity is the purchase or sale of
goods
What is a manufacturing partnership? main activity is the production of goods
What are the different kinds of
partnerships according to liability?
General and Limited
What is a general partnership? all partners are general partners who are
liable for the partnership debts to the
exten of their personal property after all
the partnership assets have been
exhausted
What is a limited partnership? one consisting of one or more general
partners and one or more limited partners
What are the different kinds of
partnerships according to object?
Universal partnership of all present
property, universal partnership of profits,
particular partnership
What is a universal partnership of all
present property?
all partners contribute to the property
which actually belong to each of them
What is a universal partnership of
profits?
one which all partners may acquire the
movable/immovable proeperty and does
not become common partnership assets
What is a particular partnership? related to the exercise of profession, no
personal assets
What are the different kinds of
partnerships according to duration of
partnership existence?
Partnership at will, Partnership with fixed
term
What is a partnership at will? no term is specified, terminated anytime
by mutual agreement or by will
What is a partnership with fixed term? one in which the term/period for which the
partnership is to exist is agreed upon
What are the kinds of partners
according to contribution?
capitalist, industrial, capitalist-industrial
What is a capitalist partner? one who contributes capital in money or
property [Show Less]