R8-M4 Business Structures 1

Question 1

what are characteristics of a general partnership?

Answer 1

• may be formed WITHOUT filing any organizational documents with the state
• unlimited liability or joint and several liabilities (personally reliable for liability besides partnership liability)
• general rule, decisions regarding matters within the ordinary course of the partnership’s business are controlled by MAJORITY vote. Matters outside of ordinary business (extraordinary) requires consent of ALL partners such as admission of a new partner
• Dissolution: any one partner can cause a dissolution by giving notice of intent to withdraw
• when the partnership is SILENT as how losses will be shared, they are shared in the same manner as profit. when profit is silent, share equally. both profits and loss are silent, share equally
• partnership agreement enforce in writing is not required, but required if the partnership business/transaction last more than 1 year
• partner acts as an agent of the partnership

Question 2

what are characteristics of a limited partnership?

Answer 2

• must be at least 1 limited partner and 1 general partner
• formation: a document called “certificate of limited partnership” in most states and must be filed with the state
• a new partner can be added only upon the consent of ALL partners

Question 3

what are characteristics of a limited liability partnership?

Answer 3

• a partner is personally liable for tort liabilities arising from his/her own negligence and of his subordinates. not liable for others

Question 4

what are characteristics of a limited liability company? hybrid of a corp and a partnership

Answer 4

• One person can form an LLC
• formation: a document called “the articles of organization” in most states and must be filed with the state
• partners are called members
• like a partnership, a member of an LLC may NOT transfer all of his/her interest in the LLC WITHOUT consent of ALL other members. A member is free to assign (sell) her interest in distribution
• could be managed by all members or by a manager upon agreement
• termination must have consent of all partners. a death member doe not automatically dissolved the business unless the remaining members vote so or to continue
• voting strength is like in a corp. it’s determined in proportion to ownership interest/contributions

Question 5

what are characteristics of a joint venture?

Answer 5

• like a general partnership
• but involve a single transaction or project