Texas Business Attorney: What is a Partnership?
Posted on | July 12, 2011 | No Comments
A general partnership is an association of two or more persons to carry on a business for profit as owners. A general partnership is created regardless of if the persons intend to create a partnership or not, or whether the association is called a “partnership” or other name. SeeTexas Business Organizations Code Section 152.051.
Texas Business Attorney: Partnerships are governed by a partnership agreement. Partnership agreements set forth the relationship between the partners, as well as the relationship between the partners and the partnership. There is no requirement that the partnership agreement be in writing or filed with the Texas Secretary of State. However, it is always best to define clearly in writing the obligations of the partners to each other and to the partnership itself. SeeTexas Business Organizations Code Section 152.002.
Partnerships are easy to form, require complying with less red-tape as corporations and have certain tax benefits. However, each individual partner is exposed to personal liability as there is no protection from a corporate veil as in corporations or limited liability companies.
In order to determine whether a partnership has been created, Texas courts will evaluate several factors, including but not limited to: 1) receipt or right to receive a share of profits of the business; 2) expression of an intent to be partners in the business; 3) participation or right to participate in control of the business; and 4) an agreement to share in losses or liabilities of the business. SeeTexas Business Organizations Code Section 152.052.
If you are debating whether to form a general partnership, need clarification regarding whether your business qualifies as a partnership, or are already in a general partnership and need to draft a partnership agreement, please contact The Wright Firm today as we can help with all aspects of a general partnership at 972-353-4600 or visit our website at www.thewrightlawyers.com.
Tags: Dallas Business Attorney > Denton Business Lawyer > General Partnership. Sole Proprietorship. > Limited Liability Partnership > partner > partnership > The Wright Firm
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