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Case study / research of limited partnership
Case study / research of limited partnership
Case study / research of limited partnership
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Ownership structures:
To select the best ownership is the most important decisions that one needs to make about ones company. It is defined by the distribution of equity with regard to votes and capital. On the basis of ownership the most common ways to organize business are
Partnership: This is also known as general partnership. It begins as soon as one start a business with another person. Both the partners may not really understand that they are in a partnership.
Sole proprietorship: It is mainly known as single owner business as it is not created by filling papers wich is important to limited liability company. One can easily create a sole proprietorship by going into business by oneself.
Limited partnership: because of costly and complicated to set up Limited Partnership is not very popular to the recent world. It is usually created by one person who is also known as general partner. He is responsible to control the limited partnership’s day to day activities. On the other hand limited partners have very little control over the daily facts.
Corporation: Creating an...
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
The second challenges to start up business are the form of ownership to choose. According
Capital is a major factor for decision making. Since the business involves a group then the three forms of business exposes the group to a greater capital availability. The liability of members is also an important factor. The partnership offers unlimited liability to the members of the partnership while the corporation and Limited Liability Company allows the members limited liability and thus their personal assets cannot be interfered with in the event of a liability. The decision making process is for the business associations but the input of all members results to the making of good and informed decisions. Finally, the taxation practices for various forms of associations informs the decision. Corporations are often taxed twice whereas the LLC and partnership business is taxed
In the Introduction of the article of the author Lynn A. Stout pointed out the two arguments in regard to shareholder primacy that were made by Adolph A. Berle and Merrick Dodd.
Imagine this, you are looking to buy a used car. You go to a car dealership that is very popular. They show you a car that you really like and you tell them that you are very interested, you just want to evaluate the alternatives first. You decide to go to an another car dealership, but this time it is a dealership that just started business. This dealership shows you a car very similar to the car you liked at the other dealership, and on top of that, it is almost $10,000 cheaper. Immediately, you know that the dealership is giving you a good deal and without hesitation you buy the car. A few months later you begin to notice that the transmission is going out in your recently purchased car. You go to the dealership and complain, but they say that’s too bad, you bought the car as is. You are beyond frustrated. You tell your friends to never buy a car from that dealership. If the company continually screws over their customers, the business will be unethical and once others find out about the poor business, it will spread like a wild fire.
There are many different types of business structures, but if you own and operate a business that it is a sole
A Sole Trader is a business that is owned by only 1 person. They are
Sole Proprietorship is one individual or married couple in business. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate and may enjoy greater flexibility of management, less legal regulation, and fewer taxes. Although this is the easiest form of business to start, "the income and losses are treated as personal and will be filed on a Schedule C along with the regular Form 1040 tax return" (IRS, 2004). If profits are minimal, the owner will be paying less in income taxes with this form of business than with a corporation. However, the business owner is personally liable for all debts incurred by the business. Sole proprietorships cannot take advantage of special business income tax rates since all income is considered individual income. In addition, sole proprietors are not protected from personal liability if they get into trouble with a client. If an upset client decides to sue, they sue the proprietor personally. If the proprietor must declare his company bankrupt, he files for bankruptcy personally. Moreover, by definition, a sole proprietorship can have only one owner, and that owner must be a "natural person" (i.e., not a corporation, trust, LLC, or other such entity.) Finally, one cannot sell or inherit a sole proprietorship.
Sole tradership is when the business is fully owned and managed by one person, though others can be employed to help run the business. As the sole traders only financial income is from the business and/or bank loan, they do not have the resources to expand and cover regional or national areas. These types of businesses are located in the small business sector and usually cover local areas. Such businesses could be hairdressers, corner shops or market stalls etc. Sole traderships have unlimited liability so if the business fails to pay its debts the financial responsibility falls on the owner/s to pay the debts in full even if they have to sell their business, personal possessions and assets.
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
The goal of this paper is to analyze the applicable tax rules and treatment governing partnership and corporation. Additionally, determine the level of impact these rules and treatment have on shareholders or partners’ interest. Conversely, evaluate the reasonings for organizations selection of partnership over corporation (and vice versa), as well as factors that influence the decision making in selecting the business entity to operate. Finally, recommend the business structure that will enhance the shareholder interest void of personal liability.
Corporate Governance is the relationship between the shareholders, directors, and management of a company, as defined by the corporate character, bylaws, formal policies and rule laws. The corporate governance system was designed to help oversee the decisions and best interest of the shareholders. The system should works accordingly: The shareholders elect directors, who in turn hire management to make the daily executive decisions on the owner’s behalf. The company’s board of director’s position is to oversee management and ensure that the shareholders interest is being served. Corporate governance focus is with promoting enterprise, to improve efficiency, and to address disputes of interest which can force upon burdens on the business. Ensuring that the clearness, and truth in a company’s business can make contribution to improving the enterprise standards and public governance.
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
The definition of a sole proprietorship is essentially a business that is run by one person and owned by that person as well. Specifically, a sole proprietorship is separated from the other business entities because of the specific the legal dynamics between the business and the owner of the business. Moreover, because of this factor, sole proprietorships are usually easy to both form, maintain as well as dissolve if need be. In a New York Times article, the authors expressed that small businesses are typically sole proprietorships and as such, this is why it was selected as the business entity (1). Furthermore, the aforementioned reasons allowed for a rather rapid decision on the basis that with this entity, there is an ability of the owner to run it how they see fit.
most sole proprietorships operate on a small scale, the main factor that distinguishes a sole proprietorship is the sole responsibility of ownership and decisions.