Construction scenario - Essay Example

There are three modern partnership forms: general partnership, limited partnership and LLP or limited liability partnership (Types of Partnerships, n.d.). In the situation given, Lou and Jose’s partnership takes form of general partnership while Miriam is their limited partner. Miriam invested her money to earn profit but will not be in charge of any business doings. In general partnership, the partners share equal rights and responsibilities in connection with managing the business. Having an agreement made orally or in writing, any of the partners can bind the entire group to a legal obligation.

Since all of the partners have equal control, each of them assumes full responsibility for all the duties and losses of the business. Although, Jose and Lou’s personal liability is frightening, this responsibility comes with a tax advantage. The partnership profits are not taxed to the business but the taxation policy requires each of them to pay individual taxes. Because of this, both of them have their own gains in their individual tax returns which are at a lower rate. Miriam, on the other hand, has limited partnership with Lou and Jose. .       The second scenario is about the Akiva and Tara who want to start their professional practice by opening a birth clinic after having completed all educational and experiential requirements to be licensed as obstetrician.

To finance the start-up cost, the two decided to take out a large loan. To help Akiva and Tara, they should be able to know more about business loans. The following are some of the most important tips when planning to have a business loan: get everything in writing, be careful when offering your security, understand loan agreements, avoid signing releases and waivers, and lastly, know your rights. As borrowers of money, Akiva and Tara need to make sure that everything is specified in writing.

There may be oral promises and agreements, but they need to rely and follow those in writing. Secondly, they should make sure and be careful of what they are offering or enlisting as their security. One of the general guidelines of making a loan is not to offer security that when taken away can greatly affect your life. Akiva and Tara should be careful because there are some lenders who ask more than what is needed. Before entering into a loan, Akiva and Tara should fully understand the agreements and the legal doctrines before signing.

It is advisable that they hire their own lawyer to protect their interests especially before signing waivers or release. Thus their lawyer could help them understand everything and explain to them the possible consequences of their waivers. Most importantly, Akiva and Tara should know their rights as borrowers. It is prudent to be cautious to avoid problems in the future. After they were