...ADVANTAGES OF A LIMITED PARTNERSHIP: * Being a limited partner puts a limitation on liability with respect both to potential lawsuits and money; the limited partner is only going to be liable for the amount of capital it contributed to the business; a business creditor cannot come after the limited partner’s personal assets. * Easier to attract investors because limited partners have limited liability to the business debts. * Profits and losses pass through the business to the partners, who are taxed on their own personal income tax returns. * Limited partners get to share in the profits and losses without having to participate in the business itself. * Liability of limited partner is set at the partner’s capital contribution, but a limited partner may not take active role in management. * Limited Partnership Definition: A partnership with at last one general partner and a limited partner, the latter contributing financially or otherwise but not otherwise involved in the business or, generally, personally liable for the debts of the partnership. DISADVANTAGES OF A LIMITED PARTNERSHIP: * If the limited partner becomes active in the business he or she may have general-partner personal liability. * if a limited partner interferes with the running of the business, they risk losing their limited partner status with consequential personal exposure to the debts of the partnership. * General partner is personally fully liable for the debts of the...
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...Finance Policy 03 December 2014 Master Limited Partnerships Executive Summary Investment vehicles are available in many different forms. They are used to earn money over a certain period of time. Investors have to make decisions quickly before the investment option is no longer available. The focus of this paper is the investment option of Master Limited Partnerships. Master Limited Partnerships are a type of investment vehicle that has been around since the early 1980s. They are a publicly traded partnership that is used by companies that own energy and natural resource assets. These companies are usually those that are mature and have no additional investment opportunities. There are several governance models for MLPs that are lined out from the traditional model to any modifications that have been made in the course of their lifetime. Each MLP can have different features oulined in their operating agreements, so investors need to have a good understanding of the MLP that can be bought into. They have advantages and disadvantages just as any other investment option. An advantage is that they are not doubly taxed while a disadvantage is that the detailed record keeping could outweigh the benefit of the tax advantage. There are more advantages and disadvantages outlined in this paper, but these are the most notable. Most are similar in nature, but there are different requirements stated for that particular partnership. The distributions are normally paid quarterly...
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...Master Limited Partnerships (MPLs) Stock: MarkWest Energy L.P. (NYSE: MWE) The sector that this research report will cover is Master Limited Partnerships (MLPs) and the stock within this sector is MarkWest Energy Partners, L.P. (MWE). Master Limited Partnerships is a business that has the tax structure of a partnership, but the ownership equity of the business trades on an exchange. In the MLPs sector, a unitholder is someone who owns stock in the company, making them part owner of the business. MLPs have two different kinds of partners, general partners and limited partners. General partners manage the daily operations of the business and own a small stake in the company. The group that has a larger stake in the company is the limited partners, who have no role in management, but they provide capital to the company and receive regular cash distributions in the form of dividends. The majority of MLPs are oil and gas midstream and downstream activities such as gathering, processing, transportation, storage and refining of oil or natural gas. The structure of how MLPs are set up allows them to avoid corporate income tax. Instead, MLPs flow income and losses through to the limited partners, which is the equity stake of the company. With this structure, unitholders pay taxes on their own individual tax returns, which provides MLPs the flexibility and opportunity to raise capital directly from the stock market by issuing new shares. In order to qualify for partnership tax...
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...Limited Liability Corporations and Partnerships Paper Limited Liability Corporations and Partnerships Paper Business owners, when starting their company, have a decision to make; either start it on their own or start it up with someone else backing them. If they start on their own small business then they have to come up with the funds to do so. If they don’t have those funds they can try to get a loan. Owners may find that starting a business may require large amounts of funding that the owner may not have and the loan amount may be too large for them to be approved for. Options are available to be able to start their small business. Limited liability corporations and limited liability partnerships are just two of those options. Both have their advantages and disadvantages and in this paper we will discuss what limited liability corporations and limited liability partnerships are and which situation best suits each option. Limited Liability Corporations and Partnerships Liabilities are a part of all businesses. All businesses develop debt that the owners are responsible to pay off during their business’ lifetime. What limited liability corporations and partnerships do is limit the responsibility of the owner when it comes to paying off the debts obtained. Limited liability corporations, gives its owners, like those of S corps, limited liability and taxation as a partnership (Gitman, 2006). Like all other corporations, limited liability corporations, or...
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...A partnership is considered to be a legal relationship between two or more persons who carry on a business with the objective of making a profit and sharing it between or among themselves; however, the persons are equally liable for its debts. A Limited Liability Partnership (LLP) is a form of partnership that protects its members from being personally liable for negligent acts conducted by other partners or employees under their supervision. It is a popular business structure given that the partnership is not taxed and the onus is on each partner to file individual tax returns. However, a LLP is primarily designed for professionals for example lawyers, doctors, engineers and accountants. Based on the definition of a LLP and the information presented in the case, one has to question whether the form of partnership intended among Kobe, Dwayne and Lebron was the most suitable for the manufacturing and marketing of sports merchandise. Powerade V KDL, LLP Powerade will indicate that an exclusive agreement to only use and display Powerade products was formed with KDL through their partner Dwayne. Irrespective of KDL’s internal challenges or communication issues, the contract was breached as Kobe on behalf KDL also entered in an exclusive relationship with Gatorade which severed the exclusive arrangement established with Powerade. Given that Gatorade is a competitor, Powerade will be concerned that information regarding their operations could be paased on to Gatorade and...
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...business structure is required to enhance and expand business opportunities for entrepreneurs and professionals, a new form of partnership. Based on S.3(1) of Partnership Act 1961 (PA 1961), partnership is the relation which subsists between persons carrying on business in common with a view of profit. Partnership offers flexibility where its members are allowed to agree or disagree upon its arrangements. The traditional partnerships found in Malaysia are the limited partnership and the general partnership. In general partnerships, partners have unlimited liability towards the debts of the company. Unlimited liability is defined as the situation where the personal assets of the partnership's members are vulnerable since there is no legal separation between the owners and the business. Hence, the partners’ personal assets can be seized to pay the debts of their company when the company’s assets are insufficient. A general partnership cannot file bankruptcy when it possessed excessive debts, which means that the individual partners will each have to file bankruptcy to get relief from the debts. Hence, partners will try to avoid risks and it restricts the expansion and growth of the business. Others change their legal status to secure limited liability when they possess extensive personal assets that they would like to protect. A general partnership cannot perform some actions whereby an individual or a company can. It cannot make contracts, sue or be sued, hold property or...
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...Limited Liability Corporation and Partnership Jacob Sanchez FIN-419 December 22, 2014 Michele Huss Limited Liability Corporation and Partnership Introduction Many people attempt to start businesses annually and need a little guidance on what their best choices are for forming the blueprint of their future endeavors. Limited Liability Corporations and Partnerships are a couple choices that can be chosen by some entrepreneurs. They have some things in common, and also have distinct differences. This paper will discuss how each type of business entity is formed, the tax benefits, some advantages and disadvantages. Lastly, these things will be evaluated to determine under what circumstances one should be chosen over the other. Limited Liability Corporation A Limited Liability Corporation, from now on an LLC, is a less complex formation of a corporation. It is formed by filling an articles of organization with the states Secretary of State office. This article will include the business name, the members, and in some states an operating agreement. (U.S. Small Business Administration, n.d.) In an LLC with more than one member an operating agreement is ideal, for structure and regulation. In most instances it will provide a roadmap of rights, arrangements, and profit sharing and loss. (U.S. Small Business Administration, n.d.) Taxation is an important aspect of forming a business, an LLC has many choices for taxation. An LLC can opt to file as a corporation, in which...
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...Limited Liability Corporation and Partnership Paper K. Smith FIN/419 June 2, 2014 The thought of running your own business can be very overwhelming. There are many things to be considered when starting a business. It involves writing a business plan, choosing a location, knowing whether to get a loan or start the business with another individuals. Knowing whether or not you will start the business as an individual or with a partner will help with the next question. How will you structure the business? In this paper I will discuss the roles of the Limited Liability Company (LLC) and the Limited Liability Partnership (LLP). I will also include my opinion as to why I would choose an LLC or an LLP if I was starting a new business. A limited liability company (LLC) is an entity in itself somewhat like a corporation; an LLC can conduct business, open a bank account and obtain a tax identification number. Owners of an LLC can choose to run the business themselves or hire someone for the day-to-day affairs of the business. An LLC can have one to several members including corporations as members (Paul, 2011). The owners of an LLC have limited liability meaning they are not liable for the debts and liabilities of the company. Creditors cannot hold the owners of an LLC responsible for payment from their personal assets if the assets of the company are not enough to pay a debt. The LLP must have one person responsible for the legalities of the company not including silent partners...
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...Limited Liability Corporation and Partnership Paper University of Phoenix FIN/419 November 26, 2012 Every business has a basic idea of the entity in which to establish. Capitalization and protection is the main focus to establish the business with a question of which type of entity should a business use to move forward. Businesses have a host of factors when making this decision, the most common forms of these entities are, partnership, corporation, sole proprietorship, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by the different state statutes. The following will list two of these entities and the business entity which I would choose. Limited Liability Corporation Limited Liability Corporation has a unique quality of being structured like a regular corporation, and having the attributes of a partnership. In a Limited liability corporation the owners are protected from personal liabilities, which are similar to a corporation, but have the tax advantages of the partnership. This means the creditors of the business may not pursue any of the personal assets of members of the LLC to recover any business debts. Also if a member of the LLC has any personal debt, the creditors may not attempt to recover from the corporation. LLC owners, called "members," can manage their businesses or hire professional managers. In addition, LLCs enjoy a lot of flexibility. For instance, they can have as many members...
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...a publicly held corporation different from a public corporation? a. x A publicly held corporation has had an IPO, and has many private shareholders rather than being a corporation owned by a governmental entity. b. A publicly held corporation is entitled to limited liability, but the public corporation is not. c. A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose d. They are two terms that have the same meaning. 2. If a corporation is properly incorporated in one state and wants to do business in a second state, the corporation a. must incorporate in the second state b. must do nothing because being incorporated in one state entitles the corporation to do business in all states c. register with the Interstate Corporation Commission d. x may be required to obtain a certificate of authority from the second state 3. Limited partners can lose their limited liability by a. investing too much in the partnership b. withdrawing from a limited partnership contrary to provisions in the limited partnership agreement c. x actively managing the business of the limited partnership d. breaching the fiduciary duty to the limited partnership 4. The major disadvantage of a sole proprietorship is a. the difficulty and cost of formation b. x the unlimited liability for the business’ debts c. the sharing of management...
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...3. Which one of the following is defined as a firm's short-term assets and its short-term liabilities? A. working capital B. debt C. investment capital D. net capital E. capital structure 4. A business owned by a solitary individual who has unlimited liability for its debt is called a: A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. limited liability company. 5. A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a: A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. limited liability company. 6. A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a: A. generally partner. B. sole proprietor. C. limited partner. D. corporate shareholder. E. zero partner. 7. A business created as a distinct legal entity and treated as a legal "person" is called a: A. corporation. B. sole proprietorship. C. general partnership. D. limited partnership. E. unlimited liability company. 8. Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers? A. articles of incorporation B....
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...Business Environment 2012 Business Environment 2012 ICBT City Campus Insaf Ismail Batch 40 ICBT City Campus ICBT City Campus Insaf Ismail Batch 40 ICBT City Campus Acknowledgement I would like to thank Mr. Anurugdha yapa for imparting great knowledge, assisting & believing in us & giving us a hand on experience & opportunity in making this assignment a success. Your guidance gave us the strength to get through many a trial in completing this assignment successfully. My endless thanks conveyed to our parents for extending their continuous encouragement & generous support. We are also grateful to them for showing us the correct path in making a wise choice in life to pursue studies at a prestigious institution. Further gratitude is extended to ICBT, All the other lecturers & Staff members, Lab Assistance & Library Staff for their assistance extended towards completing our assignment successfully. Last but not least, we would like to thank all our colleagues who have supported us in numerous ways. I take this opportunity to appreciate their endeavor to help us out with their knowledge & advices amidst their heavy work load. Executive summary The objective of this Business Environment assignment is to provide an efficient decision in understanding organizations internal and external environments. This assignment has three main tasks which has been answered efficiently and stylishly to achieve the three pass criteria’s. This report...
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...Business Structures LaGloria Williams FIN/571 April 9, 2015 Travis Hayes Every business in the world has a structure to it. It could be a small local business like a boutique or a large corporate business like a popular bank. Having a business structure to your business is what helps determine what type of ownership takes place. There are three main business structures, they are known as; sole proprietorship, partnership, and corporations. These three business structures are important to know when opening a business. This paper will describe the business structures and discussed the advantages and disadvantages that take place in each one. The first business structure is sole proprietorship. Sole proprietorship is a business that is owned by only one person. An example of a sole proprietorship business is a local floral shop; this is because it is a small business. When having sole proprietorship over a business it comes with a lot of positive and negative responsibility. It is very easy to start a small business for someone wanting sole proprietorship. The owner has complete authority of all of the decisions made for the business. The income taxes are lower than other business and easier to handle. The sole proprietor of the business also gets to keep all profits made from the business, meaning they do not have money to pay out to anyone unless there are employees of the business. The negative part of being a sole proprietor of a business is that the owner...
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...Homework Assignment for Week 1: Each week you will have a set of homework problems to complete. They are due by the following Sunday night at 11:55 pm, central time. For Week 1, please turn in the answers to the following questions: 1. Describe the field of finance. How is it different from the field of accounting? a. Finance is a powerful and influential field that can be defined as the art and science of managing money. Virtually all individuals and organizations earn or raise money and spend or invest money. Finance is concerned with the process, institutions, markets and instruments involved in the transfer of money among and between individuals, businesses and governments. b. Accounting is the methodical or precise recording, reporting, and assessment of financial deals and transactions of a business. Accounting also involves the preparation of statements or declarations concerning assets, liabilities, and outcomes of operations of a business. In other words you could best describe accounting as the process for identifying, measuring and communicating the economics information about an entity for decisions and informed judgments to make financial decisions as well as performing traditional accounting duties. 2. In a typical corporation the finance function is divided into two divisions, or departments. What are they? What does each department do? a. The Controller: Is responsible for the maintenance of adequate internal control and...
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...No. 2011-19 20 October 2011 Technical Line Financial reporting development In this issue: Introduction ...................................... 1 The models ........................................ 2 Variable Interest Model ..................... 2 Voting model ..................................... 3 Navigating through the Variable Interest Model ............................... 3 1. Does a scope exception to consolidation guidance (ASC 810) apply? ....................... 4 2. Does a scope exception to the Variable Interest Model apply? .... 4 3. Does the enterprise have a variable interest in a legal entity? ............................... 6 4. Is the legal entity a VIE? .............. 8 5. If the legal entity is a VIE, is the enterprise the primary beneficiary? ................. 14 Conclusion....................................... 19 Appendix: Flowchart of the consolidation models in ASC 810 ..21 A quick guide to understanding the Variable Interest Model and eight common misconceptions What you need to know • Depending on the circumstances, consolidation may be based on factors other than majority ownership. • To help you navigate through the Variable Interest Model, we lay out five questions you need to ask to evaluate an entity for consolidation. • We identify eight common misconceptions involving scope exceptions, determining whether an entity is a variable interest entity (VIE) and determining the primary beneficiary of a VIE. Introduction Two years after the...
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