Professional Documents
Culture Documents
Forms of Business
Ownership
Chapter # 2
Part-II
Shafayet Ullah
SECTION: A7
Forms of Business
Partnership
Types of Partnerships
1. General Partnership
2. Limited Partnership
3. Joint Venture
Types of Partnerships
1. General Partnership
liability;
general
partner
has
according
to
plan
specified
by
Types of Partnerships
2. Limited Partnership
A Partnership with at least one general partner and one or more
limited partners who are liable for losses only up to the amount
of their investment.
The general partners arrange and run the business, while the
limited partners are investors only. Investors receive special tax
advantages and protection from liability.
Limited partners legally may have no say in managing the
business. If there is any violation, the limited partnership status is
dissolved.
Types of Partnerships
Master Limited Partnerships (MLPs)
A new form of partnership, the master limited partnership
(MLP), looks much like a corporation in that it acts like a
corporation and is traded on the stock exchanges like a
corporation, but it is taxed like a partnership and thus avoids
the corporate income tax. Two well-known MLPs are Burger
King and Perkins Family Restaurants.
Types of Partnerships
2. Joint Venture
Sometimes a number of individuals and businesses join together
in order to accomplish a specific purpose or objectives or to
complete a single transaction.
A joint venture (often abbreviated JV) is an entity formed between two or
more parties to undertake economic activity together. The parties agree
to create a new entity by both contributing equity (capital), and they then
share in the revenues, expenses, and control of the enterprise. The
venture can be for one specific project only, or a continuing business
relationship such as the Fuji Xerox joint venture.
agreement
is
called
Articles
of
Partnership.
Written
articles
of
partnership
can
prevent
or
lessen
Advantages of
Partnerships
More Capital
In the sole proprietorship, the amount of capital is limited to
personal wealth and the credit of the owner. But in a
partnership business, when two or more people pool their
money and credit, it is easier to pay the rent, utilities, and
other bills incurred by a business.
Advantages of
Partnerships
Combined Managerial Skills
In a partnership, people with different talents and skills may join
together to form a business. It is simply much easier to manage
the day-to-day activities of a business with carefully chosen
partners. Partners give each other free time from the business
and provide different skills and perspectives.
Ease of Starting
As it involves a private contract contractual agreement, a
partnership is fairly easy to start. It is nearly as free from
government regulation as a sole proprietorship.
Advantages of
Partnerships
Clear Legal Status
The legal outline for partnerships have been established through
the court. The questions of rights, responsibilities, liabilities and
partner duties have been covered. Therefore the legal status of a
partnership is clearly visible. Lawyers can provide legal advice
about the partnership issues.
Tax Advantages
The partnership has some potential tax advantage over a
corporation. In partnership has some proprietorship, the owners
pay taxes on their business earnings. But the partnership as a
business does not pay income tax.
Disadvantages of
Partnerships
When two people agree on anything, there is the
possibility of conflict and tension. Partnerships have
caused splits among families, friends, and marriages.
Unlimited Liability
Each general partner is liable for the debts of the firm, no
matter who was responsible for causing those debts. You are
liable for your partners mistakes as well as your own. Like sole
proprietors, general partners can lose their homes, cars, and
everything else they own if the business loses a lawsuit or goes
bankrupt.
Disadvantages of
Partnerships
Disadvantages of
Partnerships
Disadvantages of
Partnerships
Instability
If a partner dies or withdraws from the business, the
partnership is dissolved.
Forms of Business
Syndicates
Two or more businesses joined together to accomplish
specific business goals; a popular form in underwriting
large amounts of corporation stocks.
It engages in financial transactions.
Unlike a Joint Venture, a syndicate need not to be dissolved
after the transaction is completed.
Member of syndicate can sell their own interest to
buyer, the remaining partners cant say anything.
END OF PART II