The Different Types of Business Ownership

Question 1 

A partnership is an agreement between two or more persons to get into a business with the aim of making profit. Partnerships are unincorporated. They may be in written form or in oral form. Most of them tend to be in writing to avoid misunderstandings. The understanding identifies the partners and their responsibilities, the percentage of income that each partner is entitled to, how investments and withdrawals will be done, how other partners can be brought into the company, and how the partnership may be liquidated.

Question 2 

There are three types of partnerships. General partnerships are those in which partners have equal responsibilities and are entitled to equal division of the income. They also handle the debts equally. Limited partnerships are those that restrict the liabilities and profits of partners to the amount they each invested. Limited Liability Partnerships (LLPs) ask the partners to share the amount of tax the company pays equally but then offer personal liability protection like in the case of limited partnerships (Osterwalder & Pigneur, 2010) .

Question 3 

Depending on the type of partnership the individuals get into, profits and taxes are allocated differently. For general partnerships, the individuals in the partnership share the profit equally and are also taxed equally not considering the amounts the individuals invested in the business. For limited partnerships, the profits are shared according to the percentage of investment that the individuals in the partnership put into the business. Individuals are also taxed using the same criteria. For LLPs, profits are shared like in limited partnerships but individuals in the partnership are taxed equally.

Question 4 

LLCs and S corporations offer more limited liability to the partnering individuals that partnerships do. Also, as time goes, partners have wanted their scope of duties to also get limited as most of them just want to invent. S corporations and LLCs offer this kind of freedom (Scott & Thompson, 2016) .

References

Osterwalder, A., & Pigneur, Y. (2010). Business model generation. 

Scott, I., & Thompson, H. (2016). Corporations. In  The cinema of Oliver Stone . Manchester University Press.