12 8 08

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12 8 08

  1. 1. AIM: The students will be able to explain a partnership and different types of partnerships. Do Now: What are 2 advantages and 2 disadvantages of a sole proprietorship?
  2. 2. Partnership <ul><li>An association of two or more people who co-own a business for the purpose of making a profit. </li></ul><ul><li>Always wise to create a partnership agreement. </li></ul><ul><li>Best partnerships are built on trust and respect. </li></ul>
  3. 3. General Partner <ul><li>A participant in a partnership who has unlimited personal liability and takes full responsibility for managing the business. </li></ul>
  4. 4. Advantages of Partnership <ul><li>Easy to establish </li></ul><ul><li>Complementary skills of partners </li></ul><ul><li>Division of profits </li></ul><ul><li>Larger pool of capital </li></ul><ul><li>Ability to attract limited partners </li></ul>
  5. 5. Disadvantages of the Partnership <ul><li>Unlimited liability of at least one partner </li></ul><ul><li>Capital accumulation </li></ul><ul><li>Difficulty in disposing of partnership interest </li></ul><ul><li>Lack of continuity </li></ul><ul><li>Potential for personality and authority conflicts </li></ul><ul><li>Partners bound by law of agency </li></ul>
  6. 6. Liability Features of the Basic Forms of Ownership Partnership Claims of Partnership’s Creditors Partnership’s Assets General Partner’s Personal Assets General Partner’s Personal Assets
  7. 7. Limited Partnership <ul><li>A partnership composed of at least one general partner and one or more limited partners. </li></ul><ul><li>General partner in this partnership is treated exactly as in a general partnership. </li></ul><ul><li>Limited partner has limited liability and is treated as an investor in the business. </li></ul>
  8. 8. Making a Partnership Work <ul><li>Share business Responsibilities. </li></ul><ul><li>Put things in writing </li></ul><ul><li>Be honest about how the business is doing. </li></ul>

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