Designing A Business Plan For A Future Bed And Breakfast

1765 Words Aug 8th, 2014 8 Pages
I am in the process of designing a business plan for a future bed and breakfast that I would like to open in a couple of years. I would like to purchase some land outside of Austin, TX in order to build this bed and breakfast. I plan on starting this company with a partner, my younger sister, Mercy. We want to know if we should start a general partnership, with both of us as a general partner, or a limited partnership, with me as the general partner and Mercy as the limited partner.
In addition to the type of partnership we are considering establishing, we have already decided that we will be using the entity theory of partnerships, which regards partnerships as a distinct and separate entity from either of us, the partners. As such, both Mercy and I will be able to enter into taxable transactions with the partnership. And this means that the partnership can hold the title to the land, is not legally liable for our (the partners) debts, and is required to file annual returns using the Form 1065 reporting operation results.
Our main question is that we would like to know what type of debt we should take out in order to establish this partnership and be able to finance the land in which to build the bed and breakfast. We want to know, and understand, the difference between recourse debt and non-recourse debt and how it pertains to a partnership as well as to the individual partners. We would also like to know which of these two types would be the best type of debt to incur…
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