Aba Putangina Nyo Essay Example

and what should this document contain?

Article of co partnership is a written agreement prior to the formation of a business, outlining the terms of the partnership and it must contain the firm’s name, how the firm will begin and end, nature of the business operations, monetary agreements like partners investments, determination of partner salaries and distribution of profits and losses. The document must also contain decision making guidelines and authority of partners and lastly expected time contribution of partners. 3. Both Richard and Jane plan to work full-time in the new partnership.

They believe that net income or net loss should be shared equally. However, they are wondering how they can provide compensation to Richard Powers for his additional investment of the computer. What would you tell them? They should change the profit and loss ratio in favor or Richard Powers in order for them to compensate his additional investment or they can also give him a bonus as well because if they distribute the net loss or net income equally it would be unfair for him because he invested more than the other partner.

Another advice I would tell them is Richard can contribute less cash and compensate with the investment of his computer therefore, the basis of the distribution of income is their beginning capital or initial investment. 4. Richard is not sure how the computer equipment should be reported on his tax return. What would you tell him? The report on his tax return regarding the computer equipment will be based or I related on his income or you can say that depending on their net income or

loss dividing by the partners’ profit 5.

As indicated above, Richard and Jane have worked together for a number of years. Richard’s skills complement Jane’s and vice versa. If one of them dies, it will be very difficult for the other to maintain the business, not to mention the difficulty of paying the deceased partner’s estate for his or her partnership interest. What would you advise them to do? They should know the risk of entering a partnership and all of its disadvantages stated earlier but because accidents cannot be prevented they should have alternatives or options unless one of them dies early during the partnership.

One option is that they could assign their respective heirs to take over the business for them or if they don’t have a child they must assign their personal choice of who they want to replace them but of course the heirs or assignees must have knowledge about what they might acquire in their shoulders like the liabilities of the previous owner, the responsibilities on handling a business. In paying the deceased partner’s estate they could build a trust fund through their partnership that would sustain the payables if ever one of them dies so that the remaining partner would not have a difficult time in paying those interest.