Advantages and Disadvantages O

Due to its nature, partnership is generally liable for the acts of the individual partners if committed in the course of the partnership business. However, liabilities of every partner may be regulated by the written agreement signed by partners. If no written agreement is signed by partners, liabilities of the partnership are regulated by the Partnership Act. If one of the partners retires, he or she may not be liable for the future debts of partnership if an official notice of the change is sent to creditors and the public. However, there were no official notice sent by the partners in the case; therefore, Toby may be liable for the debts of partnership. Due to the death of the third partner, partnership may be dissolved. In order to pay off the debts, assets should be sold and partners are free to continue the same kind of business after the dissolution of the

Liability All liabilities are the responsibility of each partner. In the event of litigation, any creditors can go after the personal assets of each partner to recover any debt owed. But since liability is spread out between the owners, one may feel less risk is being taken. 2. Income Taxes General partnership may also benefit from pass-through taxation, meaning the partners are taxed like sole proprietors. Business income is reported on the personal tax filing while business losses can be deducted to reduce personal tax liability. The partnership itself is not subject to federal income tax. However the partnership needs to file an information return utilizing the IRS Form 1065. 3. Longevity or continuity of the organization Once the partnership agreement is fulfilled, the general partnership may dissolve. A buy/sell agreement may be included in the articles of the partnership to allow the

This protects the limited partners from the full liability that is shared by the general partners.   Income Taxes – The limited partner’s profits are considered personal income and taxed as such. All profits from the limited partnership are considered personal income and taxed at their personal tax rates.  Longevity / Continuity – The continuity of the business is not affected by the death or disassociation of a limited partner.  An advantage for a limited partner is that the limited partner’s investment takes priority in the general partnership dissolves due to a death or disassociation of one of the general partners.

also can have risks; as the owner you cannot bring others into the business, so the

‘A partnership should have two or more people who directly own and operate a business. (James 2014, p. 504)

According to the (UPA (1997) (Amended 2013), when two people agree to share the control of a business and split the profits then a partnership has been formed (p. 11). Advantages are: creation is easy, income is personal income and losses can be deducted from taxes. Disadvantage: Each partner is personally liable for all losses, to include those of your partner (Kubasek et. al, 2016, p. 442). Shania’s lawyer points out here that in order for a standard partnership to work her husband would have to agree to accept personal liability for the debts of the partnership which isn’t in-line with his wishes. However, the lawyer informs Shania of a special type of partnership known as “limited partners. According to (Kubasek et. al), a limited partnership is established when the general and limited partner have an agreement. The limited partner’s role is to be simply a capitol investor and they have no liability for the partnership (2016). Shania’s lawyer tells her in this type of partnership the limited partner pays taxes on their share of the business profit but has no involvement in the management of the business. This option falls in line with Shania’s husbands wishes to only be an investor. However, the lawyer cautions Shania that

A contract called a deed of partnership is normally drawn up. This states the type of partnership it is, how much capital each has contributed, and how profits and losses will be shared. Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together. They can benefit from shared expertise, but like the sole trader, have unlimited liability. Advantages of Partnership =

In undertaking the PGDipBE is an opportunity to gain perspective not only on the academic course, but also the way of life. It is a challenge in meeting different people with different cultures, language, personality and to be independent. Being diverse it promotes awareness and appreciates each other. Learning numerous life experiences in dealing with the tutors, classmates and the people who come across. Having class interactions and group work, understanding each other point of views helps in building camaraderie. After being together no more differences will be felt, discovering each other’s best potentials. More importantly, grows own personal characteristic to be patient, good listener and adaptable to the changes of the environment.

According to the Partnership Act 1891 (SA), section 1(1), a partnership is defined in four sections. These sections relate to a business which includes any trade, occupation or profession that is carrying on involving continuity and system in common in terms of mutuality of rights and obligations with all the partners, and lastly with a view to profit, therefore resulting in an incorporated limited partnership. A corporation, however, is defined as a separate legal entity from its owners that also has the rights and responsibilities that an individual or a partnership entity possesses. This means that corporations and their shareholders have the right to participate in the profits, but will not be held accountable for the company’s debts and legal issues.

The test for the existence of a partnership should be applied, the definition of a partnership, the s5 of Partnership Act 1891 (Qld) states “Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.” To further break down this definition and determine what is meant by the terms “carrying on business”, “business in common” and “in common with a view to profit”. The dictionary of the Partnership Act 1891 (Qld) defines a business as “including every trade, occupation and profession”. The term ‘carrying on business” can be determined by looking at precedent see Smith v Anderson 18801, in this case the court found “The expression ‘carrying on’ implies a repetition of acts or transactions. The next issue to determine is the phrase ‘in common with a view to profit”. To break this down we look for the

New business with more than single owner may consider being Limited Liability Company or general partnership. General partnership requires two or more people to agree to own and run a company for profit where management duties are shared among them including profits and loss. In contrast, a single member can own, manage and operate Limited Liability Company. A limited liability company with single owner can easily set up business strategies and guidelines without getting approval from anybody. General partnerships are not mandated to be registered with Registrar of companies. Partners are expected to disclose information to one another according to The Partnership act 1890 which applies to general partnership. Limited Liability Company is treated as a separate legal entity according to companies Act 1985. General partnership are formed when the partners begin business activities and not formed by state

A. A partnership is a type of business organizational structure where two or more individuals join together voluntarily in a business as co-owners and each of them has unlimited personal liability for the debts of the partnership. When forming a partnership, each partner enters into an agreement that specifies not only the name of the company, location, scope of the business and the identity of the partners but also their ownership rights and obligations and distribution of profits or losses. Upon the formation of the partnership, each partner contributes capital into the company which can be either in a cash form (money) or non-cash form (other assets) such as equipment, machinery, etc. As the ownerships rights are divided among two or more partners, each partner has a separate capital and drawing account which tracks on their investments, distributions and share of gains and losses. The capital account is opened in their names in balance sheet and all transactions are accounted there. For illustration, if the investment from the partner is made on cash we debit the cash account and we credit the capital partner’s account. On the other hand, if the capital is introduced in non-cash form (assets), asset account is debited and partner’s capital account is credited normally at fair market value. As individuals provide cash or other assets to have a share in the capital of the partnership, there are two methods that can be used for handling such formation and organization of a

Owning a business is a can be very exhilarating experience. It can be culmination of a life long dream or maybe you have worked in an industry where you have a plethora of experience. You feel that instead of letting a company benefit from all of your expertise,why not be your own boss. Not to mention the potential of having an extremely profitable and successful business to boot. While being your own boss has a vast amount of advantages it also comes with an equal amount of disadvantages. In this paper and the Memorandum to follow I will be discussing the 6 different forms of business organizations as well as the advantages and disadvantages of each form of business . I will be discussing 7 characteristics that all potential business owners should use to determine which form of business would be the most practical, as well as, have the most potential for success.

Furthermore, under s115 of the Corporation Act the maximum number of 20 persons that can form a partnership however provision is made under s103 of the Corporation Act that if partnership does exceed this number it still does not make the partnership invalid. Partnership is now-a-day a widely utilized term, not only within individuals but within companies wherein an organisation are either collaborating or forming partnership or probably buying into another’s business.

a. Low start up costs, as legal and filing fees are at a minimum. However, many states and cities require a filing with county clerk.