Operations - Non financial factors

Question 1

General partnerships

Answer 1

Absent agreement to the contrary, majority vote governs all ordinary course-of-business matters.

Question 2

General partnerships need unanimity to take the following actions:

Answer 2

Admitting a new partner to the partnership
Assigning partnership property
Disposing of goodwill; or
Doing any other act that would make it impossible to carry on the ordinary business of the partnership

Question 3

A key legal issue is whether a partnership is an entity separate from its owners.

Answer 3

The assets of a partnership are treated as those of the business unit.
Title to real property may be acquired in the partnership’s name.
Each partner is considered a fiduciary of the partnership.
Each partner is considered an agent of the partnership.
The partnership may sue and be sued in its own name. Therefore, a judgment against the partnership is not a judgment against the partner.

Question 4

In other ways, a partnership is treated as an aggregate of the individual partners

Answer 4

Unlike a corporation, a partnership lacks continuity of existence.
No person can become a partner without consent of all the partners. Therefore, the transferee of a partnership interest, unlike the transferee of shares in a corporation, does not become an owner without the consent of the existing partners.
Debts of a partnership are ultimately the debts of the individual partners.
A partnership is not subject to regular federal income tax. Instead, taxable income is determined at the individual level.