Forms of Doing Business: Partnerships and Sole Proprietorships

pass-through entity

a business entity that has no tax liability; the entity's income is passed through to the owners, and they pay taxes on the income

joint and several liability

a doctrine under which a plaintiff may sue, and collect a judgment from, all of the partners together or one or more of the partners separately

limited liability partnership

a hybrid form of business organization that is used mainly by professionals who normally do business in a partnership

general partner

a partner who assumes responsibility for the management of the partnership and has full liability for all partnership debts

limited partner

a partner who contributes capital to the partnership but has no right to participate in its management and has no liability for partnership debts beyond the amount of her or his investment

limited partnership

a partnership consisting of one or more general partners and one or more limited partners

joint venture

a partnership for a limited purpose

partnership by estoppel

a partnership imposed by a court when nonpartners have held themselves out to be partners, or have allowed themselves to be held out as partners, and others have detrimentally relied on their misrepresentations

limited liability limited partnership

a type of limited partnership in which the liability of the general partner is the same as the liability of the limited partners—that is, the liability of all partners is limited to the amount of their investments in the firm

partnership

an agreement by two or more persons to carry on, as co-owners, a business for profit

flow-through tax entity

an organization that does not pay income tax on its profits but instead passes them through to its owners who pay personal income tax on all business profits

sole proprietorship

an unincorporated business owned by one person

certificate of limited partnership

document that must be filed with a designated state official to form a limited partnership

managing partners

partners who have primary management responsibility for a partnership

joint liability

the partners' shared liability for partnership obligations and debts

winding up

the second of two stages in the termination of a partnership or corporation, in which the firm's assets are collected, liquidated, and distributed, and liabilities are discharged

dissociation

when a partner leaves a partnership