General partners are those who are responsible for the day-to-day management of activities, whose individual acts are binding on all the partners, and who are personally responsible for the partnership's total liabilities. Limited partners are those who contribute only money and are not involved in management decisions and whose liability is limited to the amount of their investment.
Joint Venture acts like a general partnership, but is clearly for a limited period or a single project. If the partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership and will have to file as such, and distribute accumulated partnership assets upon dissolution of the entity.
Advantages of a Partnership
Partnerships are easy and inexpensive to establish. With more than one owner, there would be no difficulties in raising fund. Shared responsibility. The tax consequences are less as your profits are recorded directly onto your personal income tax return (no double taxation). Potential employees may be attracted to the business if given the incentive to become a partner. The business usually will benefit from partners who have complementary skills.
Disadvantages of a Partnership
General partners have unlimited liability. Partners are jointly and individually liable for the actions of the other partners. Profits must be shared with others. Since decisions are shared, disagreements can occur. Some employee benefits are not deductible from business income on tax returns. The partnership may end upon the withdrawal or death of a partner.
A corporation is different from a sole proprietorship or a partnership in that a corporation is separate statutorily created legal entity from the people who manage, own, control, and operate it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. Being incorporated essentially means the owner receives limited liability. Those with claims against the corporation can only be rewarded judgments out of the corporation’s assets.
Stockholders are the owners of a corporation based on their holdings. They own an interest in the corporation rather than specific corporate property. Stockholders are also known as shareholders. Shares of stock in the corporation represent the ownership of stockholders. Shares of stock is issued or sold by the corporation. By selling its stock, a corporation raises the capital needed to establish the business and to finance growth. The document, which acts as a contract between a corporation and its shareholders, giving the rights and duties of the shareholders with the company and between themselves, is called Articles of Association. The corporation has to observe certain legal formalities before it can registered under the Companies Act. Legal documents that required in forming a corporation are called Memorandum of association. And it has to pay registration fee depends on the authorized share capital and is determined on sliding scale Stockholders are entitled to all net profits that the corporations made. The profits are distributed in the form of cash payments called dividends.
The stockholders elect a board of directors to manage the major policies and decisions. A board of directors is a group of individual selected by the stockholders to represent the stockholders as chairman in the corporation. Board of Directors (BoD) elect the Chief Executive Officer (CEO), Chief Information Officer (CIO), Chief Financial Officer (CFO), make decisions about the corporation’s stocks and dividends, and oversee major policy decisions.
Chief Executive Officer (CEO)
Chief Executive Officer (CEO) is the highest senior management position in an organization, who is responsible for the operations of the corporation; reports to a board of directors; may appoint other managers (including a president). Chief Executive Officer, often also the chairman of the board, and sometimes...
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