Partnerships

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General Partner

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manages the business and is personally liable for partnership debts(including those that are beyond his partnership investment.May be partnership creditors.

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In a general partnership

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all partners are general partners

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Limited Partnership

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partnership with both general and limited partners; required to have at least one general partner. Only general partners are personally liable. Formations of limited partnerships require a filed certificate of limited partnership with the state

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Limited Partner

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limited liability to the amount of partnership investment. Limited partners do not participate in partnership management.

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Limited Liability Partnership

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The general partner is not personally liable for the debts of the partnership.

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Limited Liability Company

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An LLC is a new form of business created by statue that is a hybrid of partnership and corporation. Easily formed by filing a state form and entering into an operating agreement with the members of the LLC. Members can be real persons, corporations or other LLC's. An LLC offers the limited liability of a corp. and the tax status of a partnership without the disadvantages of an S corporation

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Articles of partnership

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Written document that lists the partners' names, investment amount, profit and loss distribution plan,and guidelines for adding new partners. All partners must approve changing the partnership agreement.

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Partnership income

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flows through to the partners for tax purposes on Form K-1. Partners in a partnership are subject to personal liability.

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Termination of a partnership

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Terminated upon the death or withdrawal of a partner; for remaining partners to continue business the partnership must be recognized as a new partnership. Must be dissolved and wound up.

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Admission of a new partner

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Must be approved by ALL current partners. New partners are liable for partnershi liabilities to the extent of their partnership capital contribution.

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Partnership is not responsible

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if a partner acts without the proper authority.

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LLP Filing Certificate with state must include:
If not filed it will be treated as a general partnership

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-must be signed by all general partners and include names of all general partners
-name and address of the limited partnership
-name and address of its agent
-latest date the partnership is to dissolve
-names of limited partners are not required
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General or LImited Partners capital contributions

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may not only be in cash, services performed, or property, but may also be in promise to perform services, to give cash, or property in future.

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Name of limited Partner may not be used in name of limited partnership

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unless name is also name of general partner.

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If limited partner knowingly or negligently allows name in partnership name

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then the partner is liable to creditors who extend credit to business.

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Limited Partnership words

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must be in firm's name

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Defective formation of limited partnership

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causes limited partners to to be liable as general partners.

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Under RULPA, partner who believes to be a limited partner who finds out formation was incorrect

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can avoid liability of general partner if he withdraws from partnership and renounces all future profits, and files for a new certificate that cures defect

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Foreign limited partnership

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is one doing business in a given state, but was formed in another state. Must register with Sec fo state before doing business in that state.

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LLP Profit/Loss Sharing

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shared as agreed upon in certificate agreement. If no agreement exists, then they are shared on percentage of capital contribution. Losses and any liability are limited to capital contributions for limited partners.

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Admission of new limited partner

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rwquires written agreement of all partners unless agreement states otherwise.

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Admission of new general partner

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requires approval of only general partners

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Assigned Limited Partnership interests

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If all interest is assigned, then ceases to be partner unless otherwise agreed. Assignee becomes actual limited partner if all other partners consent. Assignment does not cause dissolution of partnership.

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Partner can be BOTH limited and general partner at same time

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-has rights, and powers of general partner
-has rights against other partners with respect to contribution.

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Limited Partner can own competing interests

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but cannot withdraw capital contribution if it impairs creditors.

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General Partners Fiduciary Duty

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is owed to general and limited partners.

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Limited Partner Fiduciary Duty

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generally do not owe fiduciary duties

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Dissolution of limited partnership take place when

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completion of time period specified in certificate
-upon event specified in partnership agreement
-unanimous written consent of all partners
-court decree
-action that causes partnership business to be illegal
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A general partner may be a secured creditor of

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the limited partnership