can take the form of GENERAL PARTNERSHIPS or LIMITED PARTNERSHIPS.
The two forms of partnerships differ considerably in regard to legal
requirements and the rights and liabilities of partners.
is a joint undertaking that arises from an agreement, express or
implied, between two or more persons to carry on a business for
profit. Partners are co-owners of a business and they have joint
control over its operation and the rights to share in its profits.
No particular form of partnership agreement is necessary for the
creation of a partnership, although the partners should normally
put their agreement in writing. Both partnerships and sole proprietorships
are creatures of common law rather than of statute. Basically, the
partners may agree to almost any terms when establishing the partnership
so long as they are not illegal or contrary to public policy.
is a legal entity only for limited purposes, such as the partnership
name and title of ownership property. The partners are subject to
personal liability for partnership obligations, and partnership
itself is not subject to levy for federal income taxes, although
an information return must be filed. That is, the partnership as
an entity only reports (does not pay taxes on) the income received
by the partnership. A partner's profit from the partnership (whether
distributed or not) is taxed as individual income to the individual
and quite popular form of partnership is limited partnership, which
consists of at least one general partner and one or more limited
partners. The general partner or partners run the business and are
subject to personal liability for partnership debts and obligations.
The limited partner or partners, however, have limited liability,
both with respect to lawsuits brought against the partnership and
money at risk. The maximum money at risk is defined by the limited
partnership agreement, which specifically states how much each limited
partner must contribute to the partnership.
partnership is a creature of statute. If the statute is not followed
almost to the letter, the courts will hold that a general partnership
exists instead. Then those who thought their liability was limited
by their investment will be held generally liable to the full extent
of their personal net worth. The exemptions from personal liability
of the limited partners rest on their not participating in management.
A violation of this provision renders the limited partner just as
liable as a general partner to any creditor who does not know that
he or she is a limited partner. Note that no law expressly bars
the participation of limited partners in the management of the partnership.
Rather, the threat of personal liability normally deters their participation.
| Limited Liability Company | S
INFORMATION ON CORPORATIONS OR
ANY BUSINESS MATTER PLEASE CALL
JEFFREY S. POSIN & ASSOCIATES -- (702) 897-5870
HELP YOU DETERMINE THE RIGHT STRUCTURE
FOR YOUR BUSINESS!