Partnership Basics
What is a partnership?
An agreement between two or more people to run a business together.
What is a general partnership?
A type of partnership where all partners manage the business and are fully responsible for debts.
Who is the managing partner?
The partner who runs the day-to-day operations of the partnership.
What document outlines partnership terms?
The partnership agreement.
Name a common business that uses partnerships.
A law firm or a medical practice.
What does mutual agency mean?
Each partner can make decisions and sign contracts for the partnership.
What is a limited partnership?
A partnership with both general partners and limited partners; limited partners have restricted liability.
What is a partner's liability?
The legal responsibility a partner has for the debts and obligations of the partnership.
Why are partnership agreements important?
They clearly define each partner's rights and responsibilities.
Name a type of professional partnership.
Accounting firm or engineering firm.
What is unlimited liability?
Partners are personally responsible for all debts of the partnership.
What is a limited liability partnership (LLP)?
A partnership that protects individual partners from personal liability for certain debts.
What is the role of a limited partner?
To invest money in the partnership without having any personal liability beyond their investment.
What are the main components of a partnership agreement?
Names of partners, contributions, profit-sharing, and dispute resolution.
Give an example of a partnership in the food industry.
A restaurant owned by multiple chefs or entrepreneurs.
What is a capital contribution?
The money or assets each partner invests in the partnership.
What is the difference between active and silent partners?
Active partners engage in day-to-day operations, while silent partners invest but do not participate actively.
What does a partner do in decision-making?
Partners typically discuss and vote on decisions affecting the business.
How can a partner withdraw from a partnership?
By following the procedures outlined in the partnership agreement.
Name a famous partnership in history.
The partnership between Steve Jobs and Steve Wozniak (founders of Apple).
What does it mean for partners to co-own property?
All assets acquired in the partnership are owned jointly by the partners.
What is an S Corporation?
A corporation that has elected to be taxed as a partnership, allowing profits and losses to pass through to shareholders.
What happens if a partner dies?
The partnership may dissolve, or it may continue based on the partnership agreement.
How are profits typically shared in a partnership?
Profits are generally shared according to the terms set in the partnership agreement.
Name a large company that started as a partnership.
Ben & Jerry's or Procter & Gamble (P&G).