A partnership (also referred to as a general partnership) is a business arrangement where two or more people (who are not husband and wife) are owners of a business. Unlike a corporation, you do not need to file any documents with the state to make your business a partnership. A partnership is created by default, unless the business is specifically formed as some other type of business entity, such as a corporation, a limited liability company, or a limited partnership.
A general partnership is one in which all of the partners have the ability to actively manage or control the business. This means that every owner has authority to make decisions about how the business is run as well as the authority to make legally binding decisions. Unless the partners have a partnership agreement, each partner will have equal authority.
Partners in a general partnership don't have any limit on their personal responsibility for the debts of the business. This means that the partner could lose more than just his investment in the business – personal assets would have to be used to pay business debts if necessary. Each partner in a general partnership is also "jointly and severably" liable for debts of the business. Joint and severable liability means is that each partner is equally liable for the debts of the business, but each is also totally liable. So if a creditor can't get what he is owed by one or more of the partners, he can collect it from another partner, even if that partner has already paid his share of the total debt. If someone sues your partnership and obtains a large judgment, and your partner doesn't have the money to pay his share of it, you will have to pay the entire amount.
A limited partnership is different from a general partnership in that it requires a partnership agreement. Some information about the business and the partners must be filed with the appropriate state agency (usually the secretary of state).
Additionally, a limited partnership has both limited and general partners. A limited partner is one who does not have total responsibility for the debts of the partnership. The most a limited partner can lose is his investment in the business. The trade off for this limited liability is a lack of management control: A limited partner does not have the authority to run the business. He is really more or less an investor in the business.
A limited partnership must have at least one general partner. The general partner or partners are responsible for running the business. They have control over the day-to-day management of the business and have the authority to make legally binding business decisions. The partnership agreement will specify exactly which partner or partners have certain responsibilities and which have certain authority. General partners are also subject to unlimited personal liability for the debts of the business. The general partners of a limited partnership are also jointly and severally liable for the debts of the business, just like partners in a general partnership.
Source : http://www.alllaw.com/articles/business_and_corporate/article12.asp
Differences between an LLP and a Limited Partnership (LP)
LLPs are distinct from limited partnerships in that limited liability is granted to all partners, not to a subset of non-managing "limited partners." As a result, LLPs are more suited for businesses where all investors wish to take an active role in management.
Source : http://www.legalzoom.com/llp-guide/llp-limited-partnership-comparison.html
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Hello and Namastey,
Welcome to my blog.
I am an Accounting technician from India. After marrying Raj I came to USA and pursuing CPA here. My experiences were and will be written in this blog and the collected resources are kept here for reference along with my study notes and other stuff related to CPA Students.
Hope my Journey and blogging assist you in your preparation for a bright CPA future. And hope you find something here that will help you. Send me an email if it does and I am the happiest soul you know.
Please know that I read and appreciate every email and comment, and do my best to answer any questions within that section of each post.
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Mrs.Raj
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Welcome to my blog.
I am an Accounting technician from India. After marrying Raj I came to USA and pursuing CPA here. My experiences were and will be written in this blog and the collected resources are kept here for reference along with my study notes and other stuff related to CPA Students.
Hope my Journey and blogging assist you in your preparation for a bright CPA future. And hope you find something here that will help you. Send me an email if it does and I am the happiest soul you know.
Please know that I read and appreciate every email and comment, and do my best to answer any questions within that section of each post.
My best wishes.
Mrs.Raj
Comments, feedback, suggestions, ideas and criticism can be submitted here. Thank you!
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Submit requests to: mailmrsraj@gmail.com
You may not, except with my express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system.
Comment Policy for Cpajournal blog
• Signature Links will be deleted. I see no use for them and they add clutter to the comment section.
• Relevant links are encouraged if they are strongly related to the topic discussed in the article. Irrelevant links will be deleted without any notice.
• Spamming your URL by posting short, pointless comments (’nice post’) will not help as I will delete these comments as well.
• Irrelevant but legitimate comments which are entirely off-topic and not related to the post in question will be removed. I will however personally email you to inform you of this and will continue the discussion off the blog, if necessary.
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