Financial accounting

SUB:PARTNERSHIP BY: TEAM-F (1stB.com “D” )

EXAMPLES……., MC DONALDS –RICHARDS AND MAURICE DONALD

HP BILL HEWLETT AND DAVE PACKARD

WB(WARNERBROS)-SAM, JACK,HARRY,ALBERT WARNER

MICROSOFT –BILL GATES AND PAUL ALLEN

APPLE INC. STEVE JOBS AND STEVE WOZNIAK

GOOGLE LARRY PAGE AND SERGEY BRIN

TWITTER – EVAN WILLIAMS,BIZ STONE AND JACK DORSEY

FATHER OF ACCOUNTING

Luca Bartolomeo Pacioli aka Birth date : 1446 – 1447 Died: June 19, 1517 Parents : Bartholomeus Pacioli

PARTNERSHIP

PARTNERSHIP DEED It is a document that defines the rights and obligations of a partner. Besides namer,address,occupations of partner it lays down the duration of the business,profit share ratio,rights,salry,commissions etc..

1: GENERALPARTNERSHIP

2: LIMITED PARTNERSHIP

3: LIMITED LIABILITY PARTNERSHIP (LLP)

TYPES OF PARTNERSHIP

1.GENERAL PARTNERSHIPSA partnership arises whenever two or more people co-own a business and share in the profits and losses of the business. Other business legal structures include sole proprietorships, limited liability companies (LLCs), corporations, and nonprofit corporations. In a partnership, each person contributes something to the business -- such as ideas, money, property, or some ,combination of these. Management rights, profit share, and personal liability will vary depending on which of the three modern partnership forms the business takes: general partnership, limited partnership, or limited liability partnership (LLP). Below are basic summaries of the main types of business partnerships.

2:LIMITED PARTNERSHIPA limited partnership allows each partner to restrict his or her personal liability to the amount of his or her business investment. Not every partner can benefit from this limitation at least one participant must accept general partnership status, exposing himself or herself to full personal liability for the business's debts and obligations. The general partner retains the right to control the business, while the limited partners does not participate in management decisions. Both general and limited partners benefit from business profits

3.LIMITED LIABILITY PARTNERSHIPS Limited Liability Partnerships (LLP) Limited liability partnerships (LLP) retain the tax advantages of the general partnership form, but offer some personal liability protection to the participants. Individual partners in a limited liability partnership are not personally responsible for the wrongful acts of other partners, or for the debts or obligations of the business. Because the LLP form changes some of the fundamental aspects of the traditional partnership, some state tax authorities may subject a limited liability partnership to non-partnership tax rules. The Internal Revenue Service views these businesses as partnerships, however, and allows partners to use the pass through technique. Existing partnerships that wish to take advantage of LLP status do not need to modify their existing partnership agreement, though they may choose to do so. In order to change status, a partnership simply files an application for registration as a limited liability partnership with the appropriate state agency. All states require disclosure of the partnership's name and principle place of business. Some states also require, among other things, identification of the number of partners, a brief description of the business, a statement that the partnership will maintain insurance., and written acknowledgment that the limited liability status may expire. Partnership_steed It is a document that defines the rights and obligations of a partner. Besides namer,address,occupations of partner it lays down the duration of the business,profit share ratio,rights,salry,commissions etc..

TYPES OF PARTNERSHIP ACTIVE PARTNER SLEEPING PARTNER NOMINAL PARTNER PARTNER IN PROFITS SUB PARTNERS PARTNERSHIP BY ESTOPPEL MINOR PARTNER

TYPES OF PARTNER

ACTIVE PARTNER - partner who takes an active part in the management of the business is called active partner. He may also be called 'actual' or 'ostensible' partner. He is an agent of the other partners in the ordinary course of business of the firm and considered a full fledged partner in the real

sense of the term.

SLEEPING PARTNER - A sleeping or dormant partner is one who does not take any active part in the management of the business. He contributes capital and shares'the profits which is usually less than that of the active partners. He is liable for all the de of the firm but his relationship with the firm is not disclosed to the general public.

NOMINAL PARTNERS-A partner who simply lends his name to the firm is called

nominal partner. He neither contributes any capital nor shares in the profits or take part the management of the business. But he is liable to third parties like other partners. A nominal partner must be distinguished from the sleeping partner. While the nominal partner is known to the outsiders and does not share in the profits, the sleeping partner shares the profit a his relationship is kept secret

PARTNER IN PROFIT - A partner who shares in the profits only without being liable of the losses is known as partner in profits. He does not take part in the management of the business but he is liable to third parties for all the debts of the firm.

SUB-PARTNER - When a stranger shares the profits derived from the firm by a partner he is regarded as a sub-partner. A sub-partner is in no way connected with the firm or he not a partner of the firm. He is simply a partners' partner. Therefore, he has no rights again the firm nor he is liablle for the debts of the firm. He only shares profits from a partner.

PARTNER BY ESTOPPEL OR HOLDING OUT - When a partner is not a partner but represent to the outside world that he is a partner in a firm, he is stopped or prevented from denying the truth. He is considered as a partner in the eyes of law. Similarly, if a person is declared i be a partner by a partner of a firm and such person remained silent without denying it, he also considered a partner by holding out. Thus, such persons are liable to outsiders i partners n the principle of estoppel or holding out because on faith of their representation action outsiders have granted credit to the firm

MINOR PARTNER - Partnership arises from contract and a minor is not competent to enter into contract. Therefore, strictly speaking, a minor cannot be a full-fledged partners. But with the consent of all the partners he can be admitted into partnership for benefits only. He is not personally liable to third parties for the debts of the firm, on attaining majority, if he continues as a partner, his liability will become unlimited with effect from the date of hi original admission into the firm.

DUTIES OF PARTNER LOYALTY AND GOOD FAITH

OBEDIENCE

REASONABLE CARE

INFORMATION

MANAGEMENT

INSPECTION OF BOOKS

SHARE OF PROFITS

DUTIES LOYALITY AND GOOD FAITH - Each partner must act in good faith

toward the other partners and must not take any advantage over the other partners by misrepresentation or concealment. Each partner owes a duty of loyalty to the partnership, and this duty bars the making of any secret profit at the expense of the firm and bars the use of the firm's property for personal benefit. A partner cannot promote a competing business, and if he does so, he can be liable for any damages sustained by the partnership.

OBEDIENCE - Partners must observe any limitations adopted by a majority of the partners with regard to the ordinary details of the partnership business. For example, if a majority of the partners operate a retail store and decide that no sales can be made on credit, a partner placed in charge of the store must obey this limitation. If a third person does not know of the limitation, the managing partner will have the power to make a binding sale on credit to such a person, but if the third person does not pay his bill, the partner who violated the limitation is liable for any loss caused by his disobedience to the limitation.

REASONABLE CARE - A partner must use reasonable care in transacting the partnership's business and is liable for any loss resulting from a failure to act with reasonable care.

INFORMATION - A partner has the duty to inform the partnership of all matters relevant to the partnership. For example, if one partner is going to buy out the interest of another partner, this must be revealed to the partnership.

MANAGEMENT - Each partner has the right to take an equal part in transacting the business of the partnership. It is irrelevant that one partner contributed more than another financially or that one contributed only services when the partnership was farmed.

INSPECTION OF BOOKS - All partners are equally entitled to inspect the books of the partnership

SHARE OF PROFIT - Each partner is entitled to a share of the profits. The partners may provide that profits shall be shared in unequal proportions. However, in the absence of such an agreement, each partner is entitled to an equal share of the profits without regard to the amount of capital or services contributed to the partnership by each partner.

EXAMPLES……., MC DONALDS –RICHARDS AND MAURICE DONALD

HP BILL HEWLETT AND DAVE PACKARD

WB(WARNERBROS)-SAM, JACK,HARRY,ALBERT WARNER

MICROSOFT –BILL GATES AND PAUL ALLEN

APPLE INC. STEVE JOBS AND STEVE WOZNIAK

GOOGLE LARRY PAGE AND SERGEY BRIN

TWITTER – EVAN WILLIAMS,BIZ STONE AND JACK DORSEY

PPT BY :- SHREYAS S