Chapter 23 - General Partnerships

Question 1

Formation

Answer 1

• No formal documents, can just shake hands
• Naming business (can look online to see if been used
• Easy to form general partnerships.

Question 2

Operation

Answer 2

• Each general partner can bind the partnership legally.

- Each has a right to manage.

Question 3

Rights of Partners in a general partnership

Answer 3

1. Each partner has a right to manage under law
   - Partnership agreement: Identify a managing partner rather than all partners
2. Right to inspect the books.
3. Right to demand an accounting of income and expenses.

Question 4

Taxation

Answer 4

• Partnership not subject to federal income taxation
• Flow through entity
• Partners are required to report income on own income tax return

Question 5

Owner liability

Answer 5

• Partners have no liability protection.

- Partners are personally liable for debts of the partnership.