 The definition of a partnership is "two people or more who have consented to take part in operating a business with the objective to profit". For a partnership to be properly formed, the following is required: · The partnership has at least two people · Every partner accepts any legal responsibility faced by the partnership · Legal proof that the partnership was formed Oral partnerships are possible; however, there is no legal proof of its formation should it face any legal action. Therefore, to clearly outline a partnership, use a Partnership Agreement. General Partnership LiabilityThere is little liability protection of the owners when a partnership is formed and this is a major concern at the beginning. When setting up a general partnership, every partner is equally responsible for its duties and liabilities. Every partner in the business is liable even if one partner engages in illegal activities while doing business on behalf of the partnership. Financial LiabilityAll partners will be responsible for financial debts and other business commitments. A general partnership is not the formation of a new entity; therefore any debt incurred in the operation of the business will be shared by the partners. Taxes do not flow through general partnerships. Every partnership is responsible for their personal as well as their share of taxes earned in the partnership. Your taxes will only be calculated on the profits earned in the partnership. Forming an AgreementIt is recommended that a Partnership Agreement is used when forming a new partnership. This is a legal document proving the existence of the partnership and will govern how the partnership operates. All Partnership Agreements are different; however, consider putting the following details in your agreement: · Name and address of Partnership · List of all partners · Partnership's effective date and purpose · Voting prerequisites for business decision making · Percentage of costs per partner · How profits are shared · Financial, auditing and profit details · Partner contributions and deadlines (if any) · Partner withdrawal procedure · Partnership dissolution procedure The Partnership Agreement is the guideline for your business and must be followed by all partners. You don't usually have to file paperwork with the government when forming a partnership. Local businesses will have to be properly registered and will need to get any permits or licenses that you will need to operate legally in your state. A fictitious business name might be required for you to operate your partnership.
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AuthorYoel “Mo” Molina, 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
April 2022
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