Legal Forms Of Business Paper

942 words - 4 pages

Joel Goodwin

Legal Forms of Business Paper

Business Law/531

April 29, 2013

Shannon Wall

Legal Forms of Business Paper

When choosing to start a business individually or as a member of a group, there are different forms of business in which they should be operated. The different forms of business: sole proprietorship, partnership, limited liability partnership, corporation, and franchise. In this paper, I will identify scenarios in which each of these forms of business would be the preferred form. For each scenario, I will justify why the corresponding business form is preferred.

The first legal form of business I want to indentify ...view middle of the document...

“A general partnership, or partnership, is a voluntary association of two or more persons for carrying on a business as co-owners for profit. The formation of a partnership creates certain rights and duties among partners and with third parties.” (Cheeseman, 2010) Each partner contributes money, property, labor, or skill to the partnership and in return, expects to share in the profits or losses of the business. By combining the credit potential of the various partners, a partnership has greater opportunity for business credit. In addition, each partner is liable for all of the debts of the general partnership, regardless of which of the partners may have been responsible for their problem. A perfect scenario of this would be two consultants beginning their own consultant firm. Both made a conscious decision to joining forces and putting up the capital to create potential earnings. “They must have a profit motive in order to qualify as a partnership, even though the business does not actually have to make a profit.” (Cheeseman, 2010)

The next legal forms of business I will identify are the limited partnership and the limited liability partnership. They mean almost the same thing, with the difference being whether limited partners can participate in management.  These kinds of partnerships are generally designed for partners who are engaged in the same type of profession. A perfect example would a law firm or an accounting firm. “There are pros and cons of starting a limited partnership or limited liability partnership.  Some of the pros are, first and most importantly, there is limited liability for the limited partners in a limited partnership.  These partners can contribute the capital in a partnership without risking their personal assets.  In a limited liability partnership, the liability is limited only for partners who did not participate in creating the problem or the debt.” (Cheeseman, 2010)

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