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Explain the importance of partnership working with
Partnership case study
Explain the importance of partnership working with
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Question one
A partnership is a kind of unincorporated business association in which several individuals, termed as general partners, they control the company and are equally responsible for debts incurred; we also have other persons termed as limited partners, these kind of partners may invest but are not directly concerned in administration and are only accountable to the degree of the money investments in the company. Unlike in a Limited Liability business or a company, in partnership all partners allocate equal liability for the company's, debts and liabilities and its proceeds and losses. The partnership on its own does not forfeit income duty; however, each associate has to give a report on their share of business dealings on each person tax return. Approximated tax expenses are also essential for all of the associates for the year as the business continues. There two vital types of partnerships are : limited partnerships and general partnerships In this instance , we are uncertain of the type of partnership. Though, by supposition, we should take it at as a general partnership. In looking at the information given in this situation it is obvious that the matter lies on the partnership associations to a third party in carrying out its business.
In any form of business partnership, the associates have individual Liability, in that the Partners in person are legally responsible for all corporation debts and responsibility, including Court verdicts. It therefore implies that if the corporation itself is unable to pay a creditor, for Example a contractor, property-owner or lender, the creditor has the power to legally come After any associates personal belongings or other assets. Besides that, any individual
Associates can us...
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...to act, as trustee, is liable to discharge the whole or a part of the liability if the corporation:(a) has not, and cannot, discharge the liability or that part of it; and (b) is not entitled to be fully indemnified against the liability out of trust assets. This is so even if the trust does not have enough assets to indemnify the trustee. The person is liable both individually and jointly with the corporation and anyone else who is liable under this subsection. This section also claims that the amount is equal to the amount of the debts that are in the name of the corporate trustee and cannot be met from the assets of the trust.
Following these facts, I conclude that Michael is liable and the creditors can take any action to recover their debts from Michael, so long as the claims is equal to the amount of debts that are in the name of the corporate trustee.
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.
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
persons as partnership change to sole proprietorship due to personal case. This will affects the
Liability – The general partners are all responsible for the debts and obligations of the business, but the limited partners are only liable up to their invested amount.
The main legal issue before the court arises, in determining whether liability should be extended to reach assets beyond those belonging to the corporation and whether the corporate veil should be pierced with regard to personal liability to others.
Joint Venture is “a partnership, individual, or corporation that pools labor and capital for a limited period of time” (Kubasek, Brennan, Browne, 2015, p. 431). This method can increase liability and limit outside opportunities where the business can not expand their product line and have to utilize the products provided by the company they have a joint in a agreement. The mission of the coffeehouse is to be unique and special. This type of model would not allow originality and for that reason, its not recommend that Shania get involved with a joint venture.
This paper will focus on the Limited Liability Company, commonly known as LLC. Limited Liability Companies are a comparatively new form of business structure. It came about in 1977 once Wyoming was the first state to consent to such an organization, which merged the tax advantages of a partnership with the limited liability benefits that come with corporations. It took more than ten years following that decision for the Internal Revenue Service, or IRS, to declare that an LLC would be considered a partnership when pertaining to federal taxes. During this time, none other than the state of Florida had introduced any LLC laws. This was due to the uncertainties surrounding LLCs when it concerned the tax outcomes of the entity. (Cartano, 2008)
It is a concealed arrangement made between a testator and the trustee and is made to come into force after death. A justification for ST is the ‘dehors the will’ theory which means the trusts arise outside of the will - a inter vivos trust. Its purpose is to benefit another individual that hasn’t been written in the formal will. The testator will leave property to the trustee under the will with the understanding that they will hold the property as a gift for which they will then later on be expected to pas...
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
The trustees have reduced the organization to the extent necessary for the settlement of the bankruptcy. The loan portfolio in the Netherlands is not sold and therefore, all services of the bank have continued since the bankruptcy, except that the bank does not advise, close new contracts or initiate new loans, nor offer pay services. Company A currently loans more than €5 billion, of which €2 billion is securitized, to over 100.000 customers. There are still approximately 100 employees active for the bank. The interest repayments which Company A receives on the loan portfolio are used to pay costs and remittances to organizations who manages the securitizations and pledgees. What remains is be paid to creditors. To date, the trustees have paid out 74% to creditors. No additional distributors are expected for the coming five years. Each quarter, the trustees report on their activities. The trustees also publish an annual financial report each subsequent
A finding of insolvency is imperative, as specific rights are empowered for the creditor to exercise against the insolvent individual or organization. For example, exceptional debts may be paid off by dissolving assets of the insolvent party. Prior to proceedings, it is common for the insolvent entity to meet with the creditor in order to attempt to arrange a substitutable payment method.
Another example of business ownership is a partnership. Examples of partnerships used in business are accounting firms and solicitors firms. A partnership has two or more owners. They work, manage and are responsible for the running of the business. Individual partners may concentrate on a certain aspect of the business where they have expert knowledge. As there is more than one owner, larger amounts of capital can be fed into the business via personal funding or bank loans. Partnerships have an unlimited liability.
1.LIABILITY: There are no limits on liability with a sole proprietorship, the owner is responsible for all the businesses debts and obligations. The earning power of a sole proprietor can be limited due to lack of capital. The sole proprietor is only able to obtain personal credit to expand the company, the bank will not treat the company as its own entity
Deciding how important decisions are made is crucial in any business structure, but even more so when there is more than one owner. Therefore, the partnership agreement mandates how the owners will make decisions by either unanimous vote or by majority vote. Capital contributions include funds provided by the partners to be utilized in the business. The partnership agreement dictates how much each partner will contribute to the business as well as plan for future financial obligations. Salaries and distributions are often classified as partner withdrawals and profit/loss allocation. The partnership agreement establishes when money is available for withdrawal and how much of the profits and losses are allocated based on capital contributions. All business entities should be prepared for worst-case scenarios involving death, disability, and dissolution. Deaths and disabilities are untimely, so the partnership agreement outlines who inherits the partnership’s assets through trusts and wills. Dissolution is never a pleasant topic to think about in the beginning, but it is essential nonetheless. The section inclusion in the partnership agreement enables the partners to be prepared in the event that a dissolution does occur (Neville