Understanding Partnerships

What are the main types of partnerships?

• Franchise Agreement

• Sole Proprietorship

• General Partnership, Limited Partnership, Limited Liability Partnership

• Joint Venture

Define a general partnership.

• A general partnership is a type of corporation with limited liability.

• A general partnership is a business model that only allows one individual to manage the company.

• A general partnership is a business arrangement where two or more individuals share management, profits, and liabilities.

• A general partnership is a sole proprietorship with multiple owners.

What is a limited partnership?

• A limited partnership is a business structure with at least one general partner who manages the business and is liable for debts, and one limited partner who has limited liability.

• A limited partnership requires all partners to have unlimited liability.

• A limited partnership is a type of corporation with shareholders.

• A limited partnership has only general partners with equal liability.

Explain a limited liability partnership (LLP).

• In an LLP, all partners are personally liable for the partnership's debts.

• A limited liability partnership (LLP) is a business structure where partners have limited personal liability for the debts of the partnership.

• A limited liability partnership is a sole proprietorship with limited liability.

• An LLP is a type of corporation with unlimited liability for its shareholders.

What role does a general partner play in a partnership?

• A general partner has limited liability and does not manage the partnership.

• A general partner manages the partnership and has unlimited liability.

• A general partner is responsible for auditing the partnership's financial statements.

• A general partner only provides capital and does not participate in management.

What is the role of a limited partner?

• To provide legal advice to the general partners.

• To make all investment decisions for the partnership.

• To manage the day-to-day operations of the partnership.

• The role of a limited partner is to provide capital to the partnership while having limited liability and no active management role.

How do partnerships differ from sole proprietorships?

• Partnerships have multiple owners sharing responsibilities and liabilities, while sole proprietorships have one owner who is fully responsible.

• Partnerships are owned by a single individual with no shared responsibilities.

• Sole proprietorships require multiple owners to manage the business.

• Partnerships have limited liability for all owners, unlike sole proprietorships.

List one advantage of forming a partnership.

• Guaranteed profits for all partners.

• Access to shared resources and expertise.

• Complete control over business decisions.

• Limited liability for personal debts.

What is a key disadvantage of partnerships?

• Easier decision-making process.

• Limited access to capital.

• Personal liability for debts and obligations.

• No formal structure required.

How can partnerships benefit from shared resources?

• Partnerships benefit from shared resources by reducing costs and increasing efficiency.

• Partnerships rely solely on individual resources for success.

• Partnerships increase costs and decrease efficiency.

• Shared resources lead to more competition among partners.