Limited and general partnerships are two categories partnerships fall under. General partnership is when two or more individuals partner together and manage all aspects of the business operations, and are held responsible for any debts or decisions. Every single partner contributes money, talent, time and they all share the profits and losses.
A limited partnership is where both limited and general partners can be involved. Limited partners are held liable for the responsibilities of the business only or whatever terms agreed to when forming the partnership. That’s the key difference. Let’s learn more about the benefits of a general partnership: Straightforward taxing: One of the best aspects of general partnership is the tax benefit it offers. When businesses are set-up as partnerships, there are no taxes involved. The turnover – losses and profits are transferred to the partners. The partnership does file tax returns declaring the profits or losses, though taxes aren’t paid. Partners should file their returns showing their share of losses or profits – partners aren’t considered as employees. You can check the IRS Partnerships Website for more information regarding taxing for partnerships. Reduced paperwork: General partnership documentation is easier, economical and the paperwork is lesser. The partnership agreement should be filed at the county where business is conducted. Also, the agreement should clearly state the business purpose and list responsibilities for every partner. If you aren’t sure about how the agreement is done, you could consult an attorney. Downsides of general partnership: Legal obligation: When a business is registered as a partnership and not corporation, the business debts, obligations and any liabilities will be considered as a personal liability of the partners. This means, if the business is sued, or goes into bankruptcy, the fines thus levied will be the responsibility of the partners. In most cases, any partner can take decisions on behalf of all the partners and everyone is responsible for the decisions, irrespective of whether it was taken by one partner or partners as a whole. Management: Every partner has a say in the business and have personal interest and link to the business and money invested. This can get tricky when investments are done by one of the partners from their pockets, and there’s a reimbursement claim. What about scenarios where the partners aren’t in agreement of the purchase or investment done or decisions taken? Unless the guidelines are clear-cut and rules are defined for every scenario when forming the partnership, there could be problems between partners.
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AuthorYoel “Mo” Molina and I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters.. Archives
December 2020
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"Mr. Molina has always been there for us with timely, reliable and competent advice. He is an important and valuable part of our team." Corporate Client Eric Delgado, President of American International Export, Inc., a worldwide importer and exporter of brand name appliance parts. |
"Yoel has been responsive and attentive to our company’s best interests and needs. He has been a valuable resource to our company. Any company that enlists his services would be in good hands-- including our own clients.” Corporate Client Gibran Flynn - Co-Owner and Founder of Eleva Solutions, Inc., the South Florida leader of outsourced HR, Staffing, Training, and Loss Prevention. |
"My name is Anastasia Yecke Gude and I am the owner of Healing Hands Therapeutic Massage LLC. In the process of my company’s growth and expansion, I suddenly found myself a few weeks ago in need of a 1099 contractor agreement, and I needed it ASAP. As in, the very next day! I contacted the Law Office of Yoel Molina and his assistant put me in touch with Mo. I sent him what I had drafted up and he replied within a few hours with suggested revisions and clarifications, as well as a few insights I had not even considered. I was thoroughly impressed by the quality of work he provided, especially considering the time crunch I put him in (sorry, Mo!). I definitely recommend his services to anyone in need of a good contract attorney, and I will be calling him again for future work…hopefully in less of a rush next time!"
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