If you are thinking about starting or growing your business, you must decide which form of business entity you will use. As a business lawyer Memphis, TN often turns to for advice, we can help guide you in choosing the most advantageous form of legal business entity for your situation. Your decision should involve legal counseling on practical and legal considerations.
The most important issues are the cost to establish and maintain the entity, taxation, continuity of existence, ability to transfer ownership interests, management, control and vulnerability to personal liability.
Generally, the basic forms for a business entity include sole proprietorship, general partnership, limited partnership, limited liability company, and corporation. The choice of entity and the best ownership structure often involves many factors specific to a particular business, and, for this reason, you should consult an experienced business lawyer Memphis, TN.
In this post, we will focus on the General Partnership
A General Partnership is created by an oral or written agreement between partners to share in the profits, losses, and assets of the partnership. The relationship and various responsibilities of the business partners are governed by the written partnership agreement. In addition, a fiduciary relationship exists between the partners.
Personal Liability of Partners
Each partner in a General Partnership is personally liable for the debts, obligations and other liabilities of the business. For this reason, many clients find this form of business entity undesirable.
Taxes in a General Partnership
Although a General Partnership must file an income tax return, a General Partnership pays no federal income tax. Instead, each partner is required to declare his share of the partnership income or loss on his or her individual income tax return as reported on the Schedule K-1 from the income tax return filed by the General Partnership.
What happens when a Partner in a General Partnership dies?
The death or withdrawal of a partner in the business, or the expiration of the term of the General Partnership, will dissolve the partnership. However, the continuation of the partnership can be determined in accordance with the written partnership agreement.
If you need help with setting up your business, contact the trusted business lawyer Memphis, TN relies on.
Thanks to our friends and contributors at Wiseman Bray PLLC who have significant experience in business formation and organization.