Podcast
Questions and Answers
What is a sole proprietorship?
What is a sole proprietorship?
What is the fiduciary nature of partnership?
What is the fiduciary nature of partnership?
The trust and confidence between partners where the acts of any partners bind the partnership.
In a limited partnership, the general partner is only liable to the extent of their contribution.
In a limited partnership, the general partner is only liable to the extent of their contribution.
False
Which of the following is an obligation of a sole proprietor?
Which of the following is an obligation of a sole proprietor?
Signup and view all the answers
What happens to a business in a sole proprietorship upon the proprietor's death?
What happens to a business in a sole proprietorship upon the proprietor's death?
Signup and view all the answers
What defines a general partnership?
What defines a general partnership?
Signup and view all the answers
An industrial partner contributes their ______.
An industrial partner contributes their ______.
Signup and view all the answers
What is required for a partnership to be valid?
What is required for a partnership to be valid?
Signup and view all the answers
A partnership without a fixed duration is called a partnership at will.
A partnership without a fixed duration is called a partnership at will.
Signup and view all the answers
What does 'delectus personae' mean in the context of partnership?
What does 'delectus personae' mean in the context of partnership?
Signup and view all the answers
Study Notes
Sole Proprietorship
- Oldest, simplest, and most common business form
- Owned and operated by one person
- Sole proprietor is personally responsible for all business debts and obligations
Sole Proprietor Obligations
- Secure licenses and business permits
- Register the business name
- Pay taxes
- Personally liable for all business debts and obligations
Sole Proprietorship Advantages
- Sole enjoyment of profit
- Lower government fees
- Lower capital requirements
Sole Proprietorship Disadvantages
- Personal liability for all debts
- Burdensome for the proprietor to make all decisions
- Limited capital-raising ability
- Business existence depends on the proprietor's life, health, and will
Partnership Definition and Concept
- Two or more individuals contribute money, property, or labor to a common fund with the goal of dividing profits
- Partners become co-owners of contributions and acquired property
- Partnership begins upon contract execution, unless otherwise stipulated
Essential Partnership Requisites
- Valid contract
- Contribution of money, property, or labor to a common fund
- Lawful business objective
- Purpose of profit-sharing
- Two or more individuals with legal capacity to contract
Partnership Nature
- Based on trust and confidence (fiduciary nature)
- Actions of any partner bind the partnership in their usual trade or business
Partnership Principle: Delectus Personae
- No one can become a partner without the consent of all existing partners
Partnership Classifications
-
Liability
- General Partnership: All partners are personally liable for debts beyond contributions
- Limited Partnership: Includes general partners (fully liable) and limited partners (liable only up to their contribution)
-
Duration
- Partnership at Will: No fixed duration, termination at the will of the partners
- Partnership for a Specific Period: Agreed duration or until a specific undertaking is accomplished
Partner Classifications
- Capitalist Partner: Contributes capital (money or property)
- Industrial Partner: Contributes labor or skills
- Capitalist-Industrial Partner: Contributes both capital and labor
- General Partner: Liable beyond their contribution
- Limited Partner: Liable only up to their contribution
Profit Distribution in Partnerships
- Determined by partner agreement
- In the absence of an agreement, profit distribution is proportionate to contributions
- Industrial partners receive a fair and equitable share
Loss Distribution in Partnerships
- Follows the same rules as profit distribution
Partnership Dissolution
- Change in partner relationships resulting in a partner ceasing to be part of the business
- Can occur due to various factors like death, withdrawal, or bankruptcy
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz explores the basics of sole proprietorship and partnership business structures. It covers their definitions, advantages, disadvantages, and the obligations of sole proprietors. Test your understanding of these common business forms and their implications on business operations.
