General partnership. A general partnership is utilized when two or more people want to start a business. In most respects, the business is divided equally between the owners which includes, profits, debts and management of the business and any losses to the business are to be deducted from personal taxes. Mann & Roberts (1979) comments although not required, development of written agreements concerning the division of the business and how it will be managed removes doubt and ensures everyone is traveling in the same direction (p. 47). The disadvantage of this form is everyone is unlimited in the liability of the business. It does not matter if the others disagree with an issue and one party enters into an agreement of debt, all are now responsible for the debt. This form is supported by the Bible, however, being diligent with managing the affairs of the business is done to ensure all members are in alignment with the word of God.
Limited partnership (LP). This form would require the family to determine how each will be involved in the business and how the business formulation will transpire. An advantage to this form is limited partners are able to invest in the company while not incurring any liability except the investment. This also allows the limited partners to share in the profits which means other family members would be allowed to invest into the family business. This model fits well if the owner of the business is Xavier and the limited partners would be Alex, Bill, Carl, and Devon. This means that the brothers would sign over the business, yet the value of the business would be considered the assets of the business. The disadvantage of this business is the brothers as limited partners have no...
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...siness are covered. This will include the division of profits and debts, signify owner management, and all decision concerning the business will need to be approve by all members. However, any member will have the apparent and actual authority to enter into contractual agreements binding the LLC in the contract. The bank is willing to provide a loan for expanding the business, however, this requires personal guarantees by the brothers to secure the loan. This may be alleviated by using the business assets to secure the loan providing this is allowed by the bank and agreeable to all concerned. Another major concern is the contention of piercing the veil of the LLC. Bainbridge (2005) posits, “In doing so, veil piercing is called upon to achieve such lofty goals as leading LLC members to optimally internalize risk, while not deterring capital formation and economic
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