Essay about Outline Of A Business Partnership
In alternative 1 George is not to contribute anything and will provide his services and will get profit share 15%. Kim will contribute $150,000 cash and will get 25% share. Martha will contribute $60,000 cash and will get 10% share. Tom will contribute $250,000 of FFE and will get 50% share.
a. General Partnership:
(i) Ease of formation:
It is very easy to form general partnership. It can be created by forming a partnership deed and is least expensive as well. Under general partnership not much legal formalities are required. It can operate in multi states without getting a new permit for each state. A general partnership can be formed with oral agreement but it is desired to have written partnership agreement.
All partners or some partners can manage general partnership. In the present case George and Murtha can mange partnership business. Working partners are entitles for salaries, which are deducted before distribution of profits of partnership. The partners if agrees can also charge interest on capital invested by them.
(iii) Liability for liabilities of business:
In general partnership liability of all partners is unlimited. Partners are liable in personal capacity towards liabilities of business if a business asset fails to meet out business liabilities.
(iv) Transferability of ownership interest:
Transfer of interest in partnership is little difficult and requires dissolution deed and fresh agreement with new partner.