How are partnerships formed? What are the characteristics that justify this entity status over others?

Tenancy in Partnership

Black’s Law Dictionary defines tenancy as the right to possess or occupy land.   It goes further to state: “The possession of real or personal property by right or title, especially under a conveying instrument such as a deed or will”. The Uniform Partnership Act defines a partnership as two or more persons who join together in …

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Business Barriers

No business is instantaneously successful.   There are multiple obstacles referred to as barriers all owners and managers have to overcome.   There are three primary groups of barriers for every business out there.   They include capital (financial backing), knowledge (level of education and/or experience) and persistence (staying power).   The following sections introduce …

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Bookkeeping – Charitable Giving (Lesson 64)

non profit work

Many small business owners are actively involved in the community and thus donate time and money to their favorite cause.   In almost every case the owner believes the donation is a business deduction.     It is NOT a business deduction for tax purposes except under the C-Corporation status; however, the business is still …

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Bookkeeping – Tracking Income Taxes (Lesson 58)

It is important for the bookkeeper to track income taxes for the business and the owners.  Tracking includes apprising management of current status and pending obligations.  In addition, the bookkeeper must make sure the payments are made to the correct authority for the proper amount and assigned to the appropriate federal identification number.   To fully understand …

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Double Taxation – Not an Issue in Small Business

In the world of big business corporate earnings are taxed twice under the Internal Revenue Code.   The first layer of taxation occurs with the traditional corporate income tax.   The second tier of taxation happens when dividends are issued to shareholders.   The shareholder pays an income tax at their personal rate.   The …

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Joint Venture

The average person may not realize this, but the most notable joint venture in existence today is the National Football League.   It figuratively owns every Sunday in the fall of each year.  It is an association of 32 clubs agreeing to compete with each other, i.e. engage in athletic entertainment.  Each venturer is its …

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Forms of Business Ownership

When an entrepreneur starts out on his long journey of building a legacy with his business; he almost immediately focuses on the legal status of his business.   His thoughts include:  ‘Should I become a limited liability company or an S-Corporation?’;   ‘What if I take on partners?’; ‘How do I get more capital without giving up …

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Economic Substance Principle

The Internal Revenue Service uses an economic substance test to identify sham transactions that exist solely to reduce or eliminate taxes.    In addition,  the courts use this same doctrine to rule on the legitimacy of activity between two or more parties. This term ‘economic substance doctrine’ has other names including: *Substance over Form Doctrine * Sham …

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Business Trusts

The common law definition of a business is an investment of capital or property by individuals which creates the means to carry on towards the goal of generating a profit.   Every state recognizes different legal formats to conduct business.   The simplest and most common is the sole proprietorship .   Other forms include partnerships, limited liability …

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