PARTNERSHIPS

Proprietorship

is a company owned by a single individual.

Characteristics of a proprietorship

include complete control by the owner, unlimited personal liability, not taxable, limited life, and limited ability to raise capital (funds).

PARTNERSHIPS

association of two OR more individuals; owns and manage the business for profit.

a non-taxable entity that has a LIMITED LIFE and UNLIMITED LIABILITY.

UNLIMITED LIABILITY

owner/ partners are PERSONALLY liable for any debts or legal claims against the business/ partnerships.

UNIQUE CHARACTERISTICS OF PARTNESHIPS

CO-OWNERSHIP OF PARTNERSHIP PROPERTY

when a partnership is dissolved, each partnership’s share of the partnership assets is the balance in his or her account.

MUTUAL AGENCY

each partner is an agent of the partnership and may act on behalf of the entire partnership. Any liabilities created by one partner become liabilities of all the partners.

PARTICIPATION IN INCOME

net income/loss are distributed among partners according to their partnership agreement. HOWEVER, if partnership agreement is not stated in the partnership agreement, net income/loss id divided among partners EQUALLY.

LIMITED LIABILITY COMPANIES

form of legal entity that provides limited liability to its owners but is TREATED as a partnership FOR TAX PURPOSES.