single individual/ single owner
may need to register name “doing business as, fictitious name.”
owner is personally liable for all business obligations
no legal separation between the owner and the business.
If owner dies, business becomes assets
General Partnership (358.___)
Agreement with more than one person to share profits (legal entity)
may be established simply by an agreement to share profits (default)
each partner is equally and unlimitedly liable (joint and severable)
nothing must be filed in order to establish partnership
flow through taxation – entity does not pay taxes, rather, each partner pays taxes on income.
death of partner dissolves the partnership which must be reorganized.
Any partner may dissolve the partnership (may be liable in contract)
transfer – Partner may not sell his share unless all partners agree
i. assignment of income to other
1. no right to inspect books, property, accounting.
2. only a right to distribution of income
3. partnership may reinvest the income
Limited Liability Partnership (358.150)
partners have no personal liability for obligations that exceed the assets of the general partnership (except where claims arise from their own misconduct)
must be registered with the Secretary of State.
Limited Partnership (359.___)
A limited partner is liable only if he is also the general partner or, in addition to the exercise of his rights and powers as a limited partner, he participates in the control of the business. However, if the limited partner participates in the control of the business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner’s conduct, that the limited partner is a general partner
Must file Certificate of Limited Partnership with the Secretary of State.
Entity should also create a Limited Partnership Agreement.
i. General Partner – unlimited liability
ii. Limited Partner – limited liability
Death of general partner dissolves partnership, death of limited partnership has no impact.
Flow through taxation
Limited Partnership with a Corporate General Partner
Corporation acted as general partner, thus, if corporation had little in assets, liability would be limited
The corporation’s shareholder’s are protected from lia
i. “piercing the corporate veil” permits creditors of closely held corporations in limited circumstances to recover directly from directors, officers, or shareholders.
A corporation is “an artificial being, invisible, intangible, and existing only in contemplation of law.”
Death of shareholder has no impact on corporation
Transfer of publicly held stock may be freely done. Closely held stock may be subject to transfer limitations
i. Meetings must be had and minutes must be taken
ii. Must have a president and secretary
iii. Corporate existence begins at filing of Art. of Inc. at Sec. of State’s office
Past: 3 persons required, untra vires, could not own stock in other corps, each state had to approve, sunshine laws (meritorious)