Question

In what type of partnership do all members share equally in the managerial decisions, profits, and losses involved with the investment?

Answer 1

In a general partnership, all partners share equally in managerial decisions, profits, and losses. They benefit from shared decision-making and collective skills but face personal liability for business debts. Contrarily, limited partnerships protect silent partners from full liability, while limited liability partnerships limit liability to the amount of investment.

Step-by-step explanation:

In a general partnership, all members share equally in the managerial decisions, profits, and losses involved with the investment. In this business structure, partners collaborate in running the business and all have personal liability for the business's debts, meaning they could lose personal assets if the business faces bankruptcy or legal issues. However, they also benefit from collective skills, are subject to minimal government regulation, can raise more capital than a sole proprietorship, and taxes are paid individually on each partner's share of the income.

There are risks associated with a general partnership. One significant risk is the joint responsibility for each partner's actions, including debts and business decisions. If a partnership dissolves due to a partner leaving or passing away, the original partnership ceases to exist, though the business can continue under a new arrangement.

A limited partnership offers a different dynamic, where 'silent partners' contribute financially but do not engage in day-to-day management, thus protecting themselves from full liability. Meanwhile, a limited liability partnership limits each partner’s liability to their investment in the company, safeguarding personal assets.

Answer 2

A general partnership is a business structure where all members share equally in managerial decisions, profits, and losses, and incur personal liability for business activities. They differ from limited partnerships, where 'silent partners' only have financial participation without active management roles and limited liability.

Step-by-step explanation:

The type of partnership where all members share equally in managerial decisions, profits, and losses is known as a general partnership. In this business structure, multiple people come together to own and operate a company, wherein responsibilities for daily operations, as well as profits and losses, are divided among the partners. This type of partnership implies collective management among owners, but also exposes them to personal liability, potentially affecting personal assets.

General partnerships are contrasted with limited partnerships, where certain partners, referred to as “silent partners”, contribute financially but do not participate in the business's daily management, thus they only have limited liability corresponding to their investment. Moreover, all partners in a general partnership are taxed on their individual share of the income, but the business itself is not taxed.

The main disadvantage of this setup is that each partner is responsible for the actions of the others, potentially leading to significant financial and legal repercussions if one partner incurs debts or engages in malfeasance.