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Limited Partnership Issues - Essay Example

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The essay "Limited Partnership Issues" focuses on the critical analysis of the major issues in limited partnership. Individuals can form a limited partnership. The researcher delves into the world of limited partnership. The research focal point is on the advantages of the limited partnership…
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Limited Partnership Issues
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Extract of sample "Limited Partnership Issues"

The partnership can generate local revenues to ensure net profits crop up during each accounting period. The limited partnership is not subject to federal income tax.

The limited partnership allows the acceptance of two partners who contribute a different fund amount and a third partner who only contributes his or her services instead of capital, considering each of the owners has a spouse and adult children. Normally, the limited partner’s contribution to the partnership is lower than the general partners’ contributions. The limited partners are prohibited from participating in the management decisions of the partnership. Only general partners are allowed to make management decisions (Clifford, 2008).

In terms of the limited partnership’s liability, the creditors can get the general partner’s family assets to pay for the liabilities of the limited partnership. On the other hand, the creditors cannot get the limited partner’s family assets to pay for the liabilities of the limited partnership’s liabilities (Clifford, 2008).

The best form of business for a small business is a limited partnership. For a limited partnership, a small business can easily grow to become a big business when the most opportune moment comes. As the business profits continue, all the limited partnership’s partners can increase the store size, sell more product types, or up a new branch in another locality (Clifford, 2008).

Analyzing the above information, many people want to form a limited partnership. The limited partnership is tax-exempt. The creditors can only get the general partners’ assets. Only the general partners can make partnership decisions.  Convincingly, the limited partnership works best in the above business environment.

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