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 Partnerships
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| GENERAL PARTNERSHIP: |
| The general partnership is similar to a sole proprietorship in many ways, but dissimilar in others. The general partnership has its basis in a partnership agreement between 2 or more persons who are not registering as an LLC or Corporation. Profits and debts are shared on an equal basis between parties unless otherwise stated in the partnership agreement. When a partnership agreement does not exist, it is the State in which the partnership exists which determines the structure of the parties. A partnership agreement is a good document to have in that it will clearly set the relationships between the parties and help to avoid disagreements in the future. The duration of the partnership continues up until the death or withdrawal of a partner or partners. The partnership agreement outlines the procedures when such events occur. |
| As in a sole proprietorship, personal liability exists for debts, taxes and other business obligations. Personal assets may be attached in satisfaction of such obligations. Such liability exists for all partners even if it is the direct result of just one partner. Each partner is considered an agent of the partnership and can bind the business to financial and legal obligations. Transferability of ownership is not as easy as in the case of a sole proprietorship. Consent of the partners is a requirement before any new partner can join the business. The general rule is that partners share in the day to day operations of the business and share in the profits as well as in its debts and obligations. |
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| [Go to Partnership Order Center] |
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| LIMITED PARTNERSHIP (LP): |
The limited partnership is a hybrid of the general partnership. Limited partners are added to the equation. Limited partners bring investment money into the enterprise, but stay away from the day to day running of the firm and cannot participate in its management. A limited partner’s risk extends only to his investment, while the general partners are fully liable. The LP is treated as its own entity for liability purposes. There are more formalities as to set up. There are also more costs. Many of these formalities are similar to that of establishing a corporation. This entity lasts until the death or withdrawal of a general partner or partners. The main advantage of the limited partnership is to encourage investment in the business with the general partnership core retaining management control. The limited partners are the investors. All partners are individually taxed, whether they be “limited” or “general”.
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| [Go to Partnership Order Center] |
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* Pennsylvania Incorporations Plus+ is a service of Gibson & Perkins, P.C, 200 E. State St., Ste. 105, Media, PA 19063 - a Delaware County law firm with a focus on business transactions, real estate, taxation, estate planning, estate administration and succession planning.
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| Copyright © 2006-2008 Pennsylvania Incorporations Plus. All Rights Reserved. Disclaimer |
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