Sheldon's Case: General Partnership And Limited Partnership In Business

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Register to read the introduction… Partnership simply arises as a matter of law where two or more people are in this relationship. Partnership includes general partnership and limited partnership. They are decided by whether the partners participate day-to-day management and whether partners’ liabilities are limited or not. If and only if the partners do not involve in the daily management and have limited liabilities, it is a limited partnership. If not, it is classified in a general partnership.

As in Sheldon’s case, his families have interests on investing money on the fund of business without involve in the day-to-day management. In the mean time, Sheldon is currently in Cowra, a small town in rural NSW. He plans to hold the opportunities in far North Queensland and Western Australia, corporates with the local warehouses in those states. He might be recommended to create a limited partnership and be the only general partner to run the
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The first one is more procedure when to sign a contract. The individual partners in a partnership must own the assets of and incur the obligations relating to the partnership’s business personally and in their own names. This means, if Sheldon wants to borrow money to expand the firm’s business, they would each have to sign the loan contract and each would be personally liable for the full amount of the debt on all their investments to the business. Secondly, partners are agents for each other with respect to the conduct of the business. This means that an individual partner can incur an obligation for which all the other partners are also responsible. Thirdly, partnership is not a separate legal entity. The business’s debts are the partners’. What is more, they have to share the profit equally unless they have an agreement on how to share. The last point is the tax issue. Limited partnerships are rarely used in Australia because they are taxed on the same basis as companies. In the absence of more attractive tax treatment, it is often considered preferable to use a company rather than a limited partnership. There is no need in a company to have a general partner with unlimited liability, nor is there a risk that investors will lose the benefit of limited liability if they involve themselves in the daily management of the

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