ETEEAP - Accounting Cluster Submitted by: Misshelle Cervantes Submitted to: Prof. Alfonso S. Bestoyong, CPA, MBA Accounting 2 – Partnership A. Accounting Fundamentals 2- Important Notes on Partnership 1. Describe briefly the characteristics of a PARTNERSHIP form of business organization. - Partnership is when a business is operated by two or more individuals who share management and profits. In a general partnership, the partners manage the company and assume responsibility for the partnership's debts and other obligations. A limited partnership has both general and limited partners. The general partners own and operate the business and assume liability for the partnership, while the limited partners serve as investors only; they have no control over the company and are not subject to the same liabilities as the general partners. 2. Distinguish PARTNERSHIP against CORPORATION, list the advantages and disadvantages - Corporations and partnerships differ in their structures, with corporations being more complex and including more people in the decision-making process. A corporation is an independent legal entity owned by shareholders, in which the shareholders decide on how the company is run and who manages it. A partnership is a business in which two or more individuals share ownership. - In general partnerships, all management duties, expenses, liability and profits are shared between two or more owners. In limited partnerships, general partners share ownership responsibilities and limited partners serve only as investors. Form Advantages Disadvantages Partnership - less costly and simpler to form - do not have to pay business taxes but instead the profits and losses are "passed through" to the individual general partners - have simpler management structures than corporation - all general partners decide how the company is run - The more partners - general partners are held liable for all company debts and legal responsibilities - the owners are at risk should anything go wrong - must file a tax return to report losses and profits - a change in ownership means that a new partnership must be created. - can only generate capital in the form
you have, the increased amount of capital you can expect to add into your business - Different partners bring diversified experience and skills to a business of a loan or increased member contributions Corporation - do not hold individuals liable for the company's debt or legal obligations - corporate tax rate is usually lower than the individual income tax rate - Stock, or ownership, of a corporation, can be sold or transferred easily - can raise capital by selling stocks, bonds, or securities - are more expensive and complicated to form - required to pay state and national taxes, and shareholders must also pay taxes on their salaries, bonuses and dividends - governed by shareholders, who conduct regular meetings to determine company management and policies Sources: - - 3.
- Fall '19
- Corporation, Limited partnership, Types of business entity, partner