Memorandum Of Understanding Between Tom, Jerry, And Frank

| A general partnership is comprised of a group of two or more individuals who enter into an agreement to start a business. The partners and the business are legally the same. The partners enter into an agreement called the articles of partnership and are typically equally active in the business and the business’s management, unless otherwise stated in the partnership agreement. All profits and losses are shared by the partners in a joint business venture.

As a hybrid of partnerships and corporations, LLC’s provide limited liability for debts and flexibility to be taxed as a partnership or corporation (Staring and Naming a Business Presentation, 2012, Slide 5). Some specific advantages include being empowered authorities in the management of the business, diversity of members, limited liability, pass-through taxation, and less paperwork (appreciated by many). A drawback of this business structure is the need for a tailored operating agreement that specifies the specific needs of the

Liability All liabilities are the responsibility of each partner. In the event of litigation, any creditors can go after the personal assets of each partner to recover any debt owed. But since liability is spread out between the owners, one may feel less risk is being taken. 2. Income Taxes General partnership may also benefit from pass-through taxation, meaning the partners are taxed like sole proprietors. Business income is reported on the personal tax filing while business losses can be deducted to reduce personal tax liability. The partnership itself is not subject to federal income tax. However the partnership needs to file an information return utilizing the IRS Form 1065. 3. Longevity or continuity of the organization Once the partnership agreement is fulfilled, the general partnership may dissolve. A buy/sell agreement may be included in the articles of the partnership to allow the

Control- The general partner(s) maintain control of the business. They have equal authority unless otherwise specified in a agreement. The limited partners do not maintain any control in the partnership.

A limited liability company protects each partner from personal liability for certain obligations of the company. An important difference from other partnerships is that each partner is liable for the debts and obligations of the partners. With limited liability Company, each state has its own laws governing partners for these vessels. Some states allow only certain professions, such as lawyers and accountants to form LLP. Some states only provide protection from liability for negligence claims, leaving personally responsible for other types of requests partner. For tax purposes, profits are divided equally between the partners and the partnership is not taxed separately.

* Limited partnerships have the convenience of allowing multiple investors as limited partners to assist with cash available to run the business and support improvements or other investments into the company. The burden of running the business falls on the general partner.

General partners manage the business and are subjected to unlimited personal liability as they would be in a general or full partnership. Limited partners have no liability beyond their investment, provided they remain as limited partners. Limited partners may not participate in the management of the business (P. 609). (Rothenberg & Melnikova, 2003)

Company working deliverables should be specified in writing, not Gentleman’s Agreements in this day of doing business. The customer should see in writing on how the company will carry out the desired request

A general partnership is defined as “a form of business organization that comes into existence when two or more persons carry on business together with a view to profit” (McInnes et al. 537). Additionally, a partnership involves every partner taking responsibility for losses. When deciding whether or not a partnership exists, there are many factors that a court would look at to determine if this definition applied to Marty and Sally. The criteria for a partnership involves:

Limited partnership: Owners are distinguished as either general or limited partners. Limited partners are only liable about their contribution to the partnership involving funds, equipment and other property.

The agreement between parties will be Non-Exclusive distribution contract, whatever at this part we will discuss the terms and rights that will be at the contract as:

A partnership consists of 2 to 20 people that run the business. They have written a deed of partnership that specifies who they are, what their role is and what they are entitled to. Like a sole trader they

Partnership agreements are essential when entering into business with another entity. It is a contract between the partners (2 – 20 persons) although, ‘there are no legal formalities’ connected to the formation of a partnership . To ensure all for a fair working environment, private law is enforced outlining the rights a person is able to. The agreement further states legal consequences including mutual liability. All partners therefore are accountable for the actions of the other partners . As all partners are personally accountable for business debts, creating motivation for each partner to perform sufficiently as a degree of risk is present.

Limited to maximum of 20 people by Companies Act 1985, some professions are exempt and can have partnerships of unlimited size (e.g. solicitors, accountants, estate agents, stock brokers). Partnerships are jointly and severally liable for debts. Liability extends to private assets/personal fortune. Bankruptcy of partnership equals bankruptcy of all partners (excluding limited partners under the Limited Partners Act 1907). If a partner dies, his estate may still be liable for the businesses debts. Unless specific continuation provisions are made in the agreement, death, bankruptcy or retirement will dissolve the partnership. Less flexibility than a limited company, in transferring ownership. High level of trust required. Whether drawn or not, the profits are taxed as income.

Partners are joint and severally liable for partnership debts. Thus if one partner engages in an activity which results in large debts, all partners, regardless of whether or not they had prior knowledge of the activities would be equally liable to make good any shortfall in funds from their personal assets. A private limited company is a legal entity, the company’s finances are separate from its owner’s finances.(case Salomon v Salomon & Co) .One further difference between a partnership and a limited company is the way in which each is taxed. A company pays tax on its profits and directors are taxed on what they receive in remuneration from the company, are subject to lower corporation tax .A partnership on the other hand is not taxed in its own right as a company is (a partnership is not a separate legal person). Instead each of the partners is taxed on their share of the profit. At the end a private limited company must keep accurate records and usually deliver accounts to the Register while in partnership partners do not have to send their accounts.