PARTNERSHIP FORMATION
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Contract to two or more persons who bind themselves to contribute
money, property, or industry to a common fund, with the intention
of diving the profits among themselves
Two or more persons
Characteristics
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Unlimited Liability
o Partnership creditors can go after the personal assets of the
partners in payment of debt
Limited Life
o The life of the partnership only extends up to the fulfillment
of the purpose of partnership or up to the agreed term of the
partners
Mutual Agency
o Any partner serves as an agent of the partnership into
contracts
Ease of Formation
o Less paper works and regulatory oversight than a corporation
Formation
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Informal
- Handshake
Formal
- Contract
Assets/Liabilities contributed
- Agreed Value
- If no agreed value available
o Assets
-Fair Market Value
o Liabilities
-Present Value(FV)
Types of Partners
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General Partner
Contributes money, property and/or industry
Unlimited liability
Limiter Partner
Contributes money and/or property only
Limited liability
General Partnership
Comprised of all partners
Limited Partnership
Comprised of at least 1 limited partner and at least 1 general
partner