| -- End Ad Box ---> | | | | Unlike a general partner, a limited partner has no |
| Partnerships can be considered as the simplest form | | | | management powers and is liable only to the debts |
| of co-owned business entity in terms of establishment, | | | | incurred by the partnership to the extent of their |
| procedures and maintenance. | | | | registered investment. |
| A partnership refers to a co-owned business structure | | | | The general partner pays the limited partner a return |
| in which the partners or owners share both the profits | | | | of their investment. |
| and the losses of the company. | | | | This is perfect for those who just want to invest but |
| Some people prefer to form partnerships rather than | | | | want others to perform the actual work. |
| corporations because aside from being easier to | | | | Limited Liability Partnership |
| establish, partnerships generally do not incur tax on its | | | | This type of partnership is much more similar to a |
| profits before it is distributed to the partners. | | | | corporation. |
| There are no specific federal laws concerning | | | | In a limited liability partnership, all partners have limited |
| partnership establishments. | | | | liability which is similar to that of a corporate |
| Instead, several composite states have their own | | | | shareholder. |
| statutory laws that govern partnerships whether it is a | | | | However unlike a corporate shareholder, partners in a |
| general partnership, a limited partnership or a limited | | | | limited liability partnership have the right to manage the |
| liability partnership. | | | | business directly. |
| General Partnership | | | | Unlike with a limited partnership where at least one |
| This is the simplest form of partnership and as such | | | | general partner will take an active role while the others |
| general partnerships are simply called partnerships as | | | | will be on a passive position, a limited liability corporation |
| well. | | | | gives all partners a chance to have their hands on |
| In general partnership, all partners or owners equally | | | | managing the business. |
| share responsibilities and liabilities. | | | | This is suited for businesses where all investors would |
| A general partnership has the following characteristics: | | | | like to have an active role in management. |
| A general partnership is created through an | | | | PARTNERSHIP ESTABLISHMENT |
| agreement, has proof of existence and estoppels | | | | Although it is the simplest form of co-owned business |
| (where a party is prohibited from denying an | | | | structure to establish, a lot of issues need to be |
| agreement). | | | | addressed before the partnership goes into operation. |
| A general partnership has two or more owners. | | | | A partnership agreement will need to be established |
| The owners or the partners are all personally liable | | | | so as to address the role of each partner and to |
| for all legal actions and debts the company faces. | | | | establish a process on how future conflicts should be |
| Limited Partnership | | | | solved. |
| This is a form of partnership that is very similar to a | | | | Some conflicts normally encountered by partnerships |
| general partnership. | | | | are: |
| The difference with limited partnership is that aside | | | | Partners contribution |
| from the general partners, there are also one or more | | | | Profit and loss allocation |
| limited partners involved. | | | | Decision making |
| A general partner, as with a normal firm, has | | | | Withdrawal and admission of partners |
| management powers, the right to use partnership | | | | An attorney who has vast experience in partnership |
| property, has a predefined share of the profit, and has | | | | establishment should be a great help in creating a |
| a share in the liabilities of the partnership. | | | | partnership agreement that should address the issues |
| Limited partnership establishment requires at least one | | | | above. |
| general partner. | | | | |