Consequences of forming partnership

Question 1

Is partnership separate legal entity from partners?

Answer 1

YES, partnership is distinct from partners inside it

Question 2

Can a partnership hold property?

Answer 2

YES

Question 3

Can a partnership sued or be sued in its own name?

Answer 3

YES to both

Question 4

Are partners liable for partnership’s obligations?

Answer 4

YES, personally liable

Question 5

Can partnership liability be limited?

Answer 5

NO

Question 6

Does entity-level taxation exist for partnerships and corporations?

Answer 6

Partnerships: NO

Corporations: YES

Question 7

Must a partnership agreement be written? What are consequences?

Answer 7

NO, does not need to be written, but if not written, STATE LAW governs

When written: PARTNERSHIP governs

Question 8

Exception when state law governs over written partnership agreement?

Answer 8

When state law is MANDATORY

Question 9

Three types of mandatory state laws?

Answer 9

1) liability to third parties
2) cannot deny partners access to books and records
3) fiduciary duties cannot be eliminated

Question 10

Rule statement on law governing partnerships?

Answer 10

“The partnership agreement is the law of partnerships”