GENERAL PARTNERSHIP AGREEMENT -- STANDARD LEGAL SOFTWARE
A Partnership operates by an agreement by and between two or more people acting as co-owners
of a for-profit business. For ease of use, Partnerships are often favored over other types of
business arrangements. (See the “Other Business Structures” section below for other options.)
Because the "persons" in a Partnership can include individuals, groups of individuals, companies,
and corporations, Partnership are highly adaptable in form and vary in complexity. Unless
otherwise agreed to in the Partnership Agreement, each partner shares directly in the
organization’s profits and shares control of the business operation – this also means that the
partners are jointly and independently liable for all of the partnership’s debts.
Creation, organization, and dissolution of partnership are governed by state law. Many states
have adopted the Uniform Partnership Act. A partner relationship is generally the result of a
contract either express or implied with no formal requirements (such as a signed document). To
determine whether a partnership exists courts look at: (1) intention of the parties, (2) sharing of
profits and losses (3) joint administration and control of business operation, (4) capital
investment by each partner, and (5) common ownership of property.
Each partner in a General Partnership is personally liable for torts or wrongdoings committed by
the partnership and its agents. (FYI, this is not the case in a limited partnership, where one or
more general partners manage business operations and assume personal liability for partnership
debts while, others merely contribute money and share in the profits but take no part in running
the business. As a result, the partners who only contribute money incur no liability beyond the
contribution of the money invested. Limited partnerships are also governed by the Uniform
Limited Partnership Act in many states.)
While federal law plays a minimal role in partnership law, it does govern whether a partnership
exists for federal tax purposes. For federal tax purposes, a partnership is not a taxable entity –
rather, partnership income is taxable to the partners in proportion to their share in the company’s
profits.
Although a partnership does not offer the liability protection to the partners that a corporation
can offer to its shareholders, partnerships tend to be less cumbersome, easier to manage from an
administrative standpoint and require few, if any, document filings with governmental agencies.
© The Standard Legal Network, LLC. All rights reserved.
The General Partnership Agreement forms included within the software can be used to establish
the rules and requirements under which the partnership operates a business. The software
contains a customizable partnership document and complete instructions to complete the form.
The document allows up to four partners to be involved.
OTHER BUSINESS STRUCTURES:
Although the software you have purchased provides information for the formation of a
partnership, listed below is a brief overview of some of the other more common business
structures. This information is provided for your reference. It is STRONGLY recommended that
if you are unsure of any of the aspect of the type of business that you wish to form that you
consult with an attorney, accountant, financial adviser, and/or banker to help you determine
which structure best suits your needs.
Corporation
A for-profit corporation is a business organization formed for profit that is separate and apart
from its owners (the owners are called "shareholders"). The corporation is managed by a board
of directors that elects officers to carry out the daily operations of the business. A corporation is
a legal entity in its own right. As a separate entity, it has its own rights, privileges, and liabilities
apart from the individuals who form it.
Because the corporation is a separate legal entity in the eyes of the law, the shareholders are
generally not personally responsible for the debts or obligations of the corporation. A
stockholder’s personal liability is usually limited to the amount of investment in the corporation
and no more.
A corporation has shareholders who invest money in the business. The shareholders hold annual
meetings (or meetings more frequently) at which they elect directors (or a board of directors).
The directors make policy decisions for the company and select the corporate officers (generally
President, Vice-President, Secretary and Treasurer) who manage the day-to-day affairs of the
business.
A corporation affords its shareholders a shield against liability (provided that the corporation
exists and operates its business separate and apart from its shareholders - see below). A
corporation continues to exist after the death of or transfer of shares by one or more of the
shareholders. A corporation pays taxes on its profits, and its shareholders pay taxes on dividends
(unless "S" tax status is elected - see below).
© The Standard Legal Network, LLC. All rights reserved.
Limited Liability Company
A Limited Liability Company (LLC) allows for pass-through taxation similar to partnerships and
"S" Corporations. All 50 states and Washington, D.C. have now adopted some form of LLC
legislation. Many business professionals believe LLCs present an attractive alternative to
corporations and partnerships because LLCs combine many of the advantages of both. With an
LLC, the owners can have the corporate liability protection for their personal assets from
business debt as well as the tax advantages of partnerships or "S" Corporations. Its tax treatment
is similar to an "S" Corporation without some of the IRS’ restrictions.
Sole Proprietorship
This type of business is generally owned by a single individual or a several family members. A
sole proprietor maintains and retains complete control of and responsibility for the business,
receives all profits, is responsible for all loss, as well as all taxes and liabilities of the business.
There is no liability protection offered to a sole proprietor and the persons engaged in this type of
business are at risk of losing personal assets, even if the same are not part of the business. The
primary advantage to this business is that there is little "official" paperwork required to start and
run this type of business and decisions can be made quickly by the owners of the business.
Limited Partnership
As is stated above, in a limited partnership there must be at least one general partner who
manages the business and who is fully and personally responsible for all claims against the
partnership business. In addition, there are investors (i.e. the limited partners - known in the past
as "silent" partners) who do not engage in the management of the business and whose liability
for the business is limited to the extent of their investment into the business. Like a partnership,
the liabilities and distribution of profits are based upon the agreement reached by all of the
partners.
Limited Liability Partnership
A limited liability partnership has the same characteristics of a general partnership provided,
however, none of the partners can be held personally liable for claims against the business.
Under this form of business, each of the partners is generally not liable for the errors or
negligence of the other partners unless they themselves are supervising, directing, or involved in
the action for which a claim has been filed. As with a general partnership, profits are taxed as
personal income for each individual partner. To obtain the benefit of the limit on the liability,
this type of partnership must file articles or other appropriate documents with the state - in other
words, it requires a formal filing to start this type of business.
© The Standard Legal Network, LLC. All rights reserved.
Keeping in mind the information above, you should now access and complete the legal forms
appropriate for your situation. Open each relevant form from within the software format folder
you wish to use, read all of the instructions provided in the introduction section of the form, and
complete the form using the directions provided in the FORMAT file.
GETTING HELP / TECHNICAL SUPPORT
=================================
The most common error regarding the use of the software or the completion of the legal forms is
that the user has not fully read the comprehensive instructions provided. PLEASE READ ALL
OF THE INSTRUCTIONS PROVIDED PRIOR TO COMPLETING ANY OF THE FORMS!
If you have read all of the information provided and are still having difficulty using the forms,
check the Frequently Asked Questions section of our website at http://StandardLegal.com/faqs.
If you still have a problem after reviewing this FAQs section, you can also email
support@StandardLegal.com to contact one of our support specialists. While we cannot and do
not offer you any legal advice with the purchase of this software, we can help you with any
technical issues regarding the file formats and other use issues. Our support staff does its best to
answer support questions within one business day.
© The Standard Legal Network, LLC. All rights reserved.
