Business Organization_Partn

Business Organization_Partn - Business Organization For 5...

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Business Organization For 5 different business organization forms (sole proprietorship, general partnership, public corporation; LLC) you need to understand and apply to a hypothetical start-up situation the following factors affecting choice of business organization form. a) tax ramifications; b) owner liability (extent of liability); c) control considerations; d) ease and expense of formation and operation; e) projected life of the business; f) raise capital: angel investors versus venture capitalists (what kind of downside protections do vc wants? Preferred stock, perhaps preferred convertible stock with voting rights and anti-dilution protections so that future rounds of venture captial do not unduly dilute their ownership stake in the corporation. g) transferability of ownership interests.
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Partnership Law Business organization law is based in large part on agency law, which is based in common law. Therefore, you should quickly realize that business organization law is state based. So although there are partnerships and corporations that are national and international in scope and reach, the underlying organization is based in state law. Basic principles of agency law include how do you create and dissolve the agency relationship, what is the authority or powers within that relationship, what duties or rights are owed within the organization, and finally what are the liabilities within the organization.
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I. Formation of a general partnership based in state law, often states have adopted the UPA (uniform partnership act). A. Express: oral or written; really the formation of a contractual relationship. A partnership agreement is required if the underlying business is covered by the statute of frauds. Any person with the capacity to enter a contract can be a partner. Usual contents of Partnership Agreement: 1. Operating name of partnership 2. Fixed term with a duration stated or at will. 3. Contributions to be made by individual partners if any. 4. Manner of dividing profits and losses; salaries, compensation for special duties if any. 5. Restrictions on the authority of any partners. 6. Conditions for withdrawal from partnership; 7. Continuation of partnership such as a buy-sale agreement. B. Implied: implied from conduct of the party. C. By Estoppel (justifiable reliance by third party)
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Definition A. Four criteria: 1. Voluntary association of 2 or more persons; 2. Carrying on business; 3. As co-owners; 4. For profit. B. Factors to consider in deciding whether there is a partnership or not: *Share of business profit and management; *Receipt of profits unless in payment of a debt, wage, rent, annuity, interest on loan, sale of goodwill of a business. *Share in business losses.
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Business Organization_Partn - Business Organization For 5...

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