CREATION OF PARTNERSHIPS Flashcards
What are the main types of partnerships?
a general partnership, limited partnership, and a limited liability partnership
When is a general partnership created?
a general partnership exist if (1) two or more persons, (2) as co-owners, (3) carry on a business for profit
What formalities are required to create a general partnership?
formalities (i.e., a written agreement) are not required to create a general partnership;
a person’s intent to form a partnership or be partners also not required - this mean that it is possible to create a partnership accidentally
What is not enough to create a partnership?
- part ownership or common ownership or property alone not enough to create a partnership - a joint venture also not enough to automatically create a partnership
What is a joint venture?
A joint venture where two or more parties seek to develop a single enterprise/project for profit by sharing the risks associated with the development
Who is presumed to be a partner of the business?
a person who receives a share of the profits of the partnership business presumed to be a partner
When will a person who receives a share of the profits of the partnership business not be presumed to be a partner?
They will not be presumed if the profits were in payment: (1) of a debt, (2) wages as an employee or independent contractor, (3) payment of rent (4) payment of an annuity or other retirement benefit (5) payment of interest/loan charges (6) payment for the sale of the goodwill of a business
Who are the members of a limited partnership?
-a limited partnership is a partnership that has general and limited partners;
- I must remember that a limited partnership must have at least one general partner
Does this mean that individuals can inadvertently create a general partnership even if their expressed subjective intent is not to do so?
Yes.
