The Different Kinds Of Business Partnership Forms
Different Kinds of Partnership Document Forms
We are aware that there are different types of business organizations such as Sole Proprietorship, Partnership, Joint Ventures, Corporation and Limited Liability Companies. The sole proprietorship is a business organization that has one owner. Partnership is a business organization that owned by two entrepreneurs. Joint ventures is a business organization that can be formed by two or more parties with equal share on capital, expenses and will share equal share on the profit. Corporation is an institution that grants charter recognition and has different legal entity from members. And the limited liability companies are legal forms of business abbreviated by LLC that provides limited liability to its owners.
The common business organization used in business is partnership. Understanding and quick decision making are quickly meet; there are only two owners that will make decision which is good for the business. However, in terms of suggesting ideas for the improvement of the company, partnership businesses are limited to two heads only.
If you are thinking of starting a partnership business, one or both of the partnership must know the different types of partnership, its rules and the necessary documents to file. Each types of partnership have its own forms, in order to avoid future discretion the partners must fill up the correct document. Choose which one suits you and your partner in the following partnership types.
1. Short Term Partnership. Described as the capital gain of the business is limited to one year or less. However, all the responsibilities and other issues are the same on long term and limited partnership.
2. Long Term Partnership. Described as the capital gain of the business has longer limit than the short term in which both partner need to agree how long. This type of partnership covers all basic aspects in short term partnership, but includes provisions rights for additional capital contributions, rights of refusal and loans.
3. Limited Partnership. Described as the capital gain of the business is unlimited or consider as open partnership. This is the common partnership that business owners used, as both can put up additional capital as the need arises. However the difference is that in this type of partnership, the partners are using the LLC operating agreement for better equal entity rights.
Each type has different forms; the short term partnership used the Short Form Partnership Agreement. The long term partnership used the Long Form Partnership Agreement with specified additional inclusion rights. And the limited partnership used the Limited Partnership Agreement Form plus the LLC Operating Agreement form. Additional document must be exhibit as Appendix A, B and C or until all the documents needed are reach. It is very important that all are legal and written to avoid chaos, misunderstanding and unwanted claims that can lead into bankruptcy.