Journal Entries at the Time of Retirement

| The partners are jointly and severally liable for business debts and obligations. The partners are held personally responsible for the business and may be sued personally for liability. Partners’ personal assets are subject to lawsuit(s) made against the business. Lack of continuity; death of a partner may end the partnership/business if a buy/sell agreement is not in place. Disagreements may be difficult to resolve.

The benefits of Partnership Company are that business is anything but difficult to build up and start-up expenses are low. There is more capital accessible for the business. Workers that are of high-bore are made accomplices. The burdens are that the obligation of the accomplices for the obligations of the business is boundless . There is additionally danger of differences and contact among accomplices and administration. Every accomplice is an agent of the partnership and is at risk for activities by different accomplices. This means that it brothers choose this type, they will be responsible for each other’s action irrespective of the fact whether they like it or

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

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

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

Longevity/Continuity- The death or absence of the general partner will dissolve the partnership unless stated in a prior agreement. The death or absence of a limited partner will not dissolve the partnership but the shares of the limited partner will belong to their estate.

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

11. [LO 1] Absent any special elections, what effect does a sale of partnership interest have on the partnership?

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.

a partners that might end or dissolve partnership. One of the main drawbacks of a

* The ownership of the partners is dissolved and they become mere employees who are responsible to the shareholders and Board of Directors

A partnership is a business organization where the partners own the business together and are

Longevity: Similar to a sole proprietorship, in case of death or incapacity of a partner the

When Haili and John registered a proprietary company or form a partnerships, there are some legal rules and regulations attached to each of the type. To face those rules and regulations appropriately, a proper consideration is required by the each party.They have to know that a proprietary company is a smaller form of a public company when a partnerships is a form of organization when two or more people gather and do a business together (Pearce 2015). Consideration from the party comes from the management of the company and the willingness to use their personal debts. When Haili and John wants to be a director of Sparkle Pty Ltd, they can form a partnerships or a proprietary company. A proprietary company is a small company under the Corporations act 2001 (Cth), thus a partnership is only bind under The Partnership Act 1985. If Haili and John wants to manage the organization and be liable for the debt that arise from the organization, they can form a partnerships. Therefore, a proprietary company is separate legal entity and the amount of each party are liable for only the number of shares they own on the company (Pearce 2015). There is another form of partnership called limited partnerships that the members can have limited liability but cannot manage on the partnership (Pearce 2015). According to Seago and Horvitz (1980), a partnerships may have a characteristics of minimum 2 or more members and each party is a liable party if the partnerships goes