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13 Cards in this Set
- Front
- Back
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Partnership
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an association of two or more persons to carry on as co-owners in a business for a profit.
-If there is a consistent loss IRS will call it a hobby and will not let you write-off losses as expenses. |
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Characteristics of Partnership (2)
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-Contractual relationship showing separation of cost, profit, etc.
-if no written contract, gov (partnership statute) will make it a 50/50 relationship |
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Partnership Property (3)
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-Assets contributed to business
-Acquired during business 0If failed business, all will be sold and split 50/50, they wont get items back. |
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Partnership Interest
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Intangible interest: stock and bonds
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Partnership management style (4)
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-equal rights in management: 50/50 causes conflict, so you should have a tie-breaker
-agents: when signing>name, partner -one vote -consistent of all parties |
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Profits and losses
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divided equally unless otherwise stated
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Unlimited Liability (2)
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-Creditors will come after partner with the most money, who can sue other party for equal losses
-Creditors can come after personal property |
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Limited Liability Partnership (LLP)
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Requires a written contract stating LLP. 3rd parties must know there is limited liability, and can go after property is not paid.
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Dissolution (2)
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-If one partner leaves the partnership is destroyed, no longer a business.
-The left over partner(s) can make new partnership |
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Winding up
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Leaving partner is still responsible for any portion of the bills and getting their portion of assets. Distribute assets accordingly (50/50 or otherwise stated)
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Who is Paid when? (4)
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1st) Outside Creditors
2nd) Inside Creditors 3rd) Interest you put in 4th) Then Profits dispersed |
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Tax Consequences
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You are taxed on just your share of the profits
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Indemnification (3)
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-They are the agent because agent may incur damages
-When acting in his authority, pay coverages and liability -Almost like insurance, holds agent harmless |
