Section 27.2

1. Section 27.2

2. TODAY’S AGENDA BELLWORK: Take Bus Quiz • Discuss types of Business • What are the advantages and disadvantages of each? • List ones you are already aware of • Divide the business up amongst the class. Find all advantages & disadvantages • Share with the class Survey: Are you ready to be an entrepreneur

3. Come up with a business idea • Name the business • Write goals & objectives for your company • What do you want to achieve?

4. SOLE PROP • YOU ARE THE BOSS (total control) • Disadvantages –you lose all of the money • PARTNERSHIP • 2 MINDS- • Dis – fights or diff • CORPORATION • Board of directors • Dis- gov regulations

5. SOLE PROPRIETOR ADVANTAGES DISADVANTAGES Most potential to loose Limited capital Unlimited liability Limited human resources Limited lifetime ZONING ORDINANCES • You are the boss • Easily formed • Retention of profits • Freedom from government control • One time taxation

6. ADVANTAGES DISADVANTAGES INCOME MAY BE TAXED MORE THAN ONCE ORIGINAL FOUNDERS CAN LOSE NOT ONLY THE CONTROL, BUT ALSO THE ACTUAL OWNERSHIP OF THE CORPORRATION. • SELLING SHARES • A LEGAL ENTITY, OR LEGAL PERSON, CREATED BY THE STATE • CONTINUITY OF EXISTENCE 2. Practice Timing Create Timers

7. TODAY’S AGENDA • HOMEWOR: FINISH FTC ASSIGNMENT – due THURSDAY (No Exceptions) • GET OUT PAPER FOR NOTES • Notes over partnerships ch27 pg588 • Draft an articles of partnership as a class • HOMEWORK: FINISH BUSINESS PLAN. DUE TOMORROW. Late work will not be accepted. • Read pg 588 when would a partnership agreement need to be in writing? • What is the most important part of a partnership? Explain your answer in detail

8. Pre-Learning Question What is a partnership?

9. The Nature of Partnership “two or more persons that carry on a business for profit.”

10. Advantages Disadvantages • share the liabilities. • responsible for the others’ actions. • share profits. • Disagreements • Death of a partner dissolves the partnership. • More capital and credit available. • Burden of work is shared. • Responsibility for losses shared.

11. Forming a General Partnership 3 ways to form a partnership • By agreement • By proof of existence • By estoppel

12. Come up with an example of how to start a partnership in each of the following ways • By agreement • By proof of existence • By estoppel

13. 27.2 Partnership Formation Articles of partnership Partnership by contract Partnership by proof of existence Formed because of method of doing business. Sharing of profits is prima facie evidence Partnership by estoppel Third party led to believe a partnership exists No true partnership created

14. By Agreement Articles of Partnership • Valid assent • Express and may be written or oral. • If over a 1yr or buy sell or lease • Put in Writing

15. Important Points Covered in an Agreement • Amount of investments • Salaries • Profits • Withdraw of funds • Withdraw as partner • Parties • Specific nature • Scope • Limits of the business • Planned duration

16. v • Make a list of items you would want to put in your partnership agreement based on the suggested items on the previous slide.

17. CREATE AN ARTICLE OF PARTNERSHIP • TYPE OF BUSINESS • PARTNERS • ETC.. • Divide class up. Each student should come up and type their clause on the screen.

18. TODAY’S AGENDA • TURN IN FTC ASSIGNMENT – due NOW NO EXCEPTIONS. http://ianscatering.yolasite.com/ • GET OUT PAPER FOR NOTES • Notes over partnerships ch27 pg588 • Draft an articles of partnership as a class • HOMEWORK: FINISH BUSINESS PLAN. DUE TOMORROW. Late work will not be accepted. • Read pg 588 when would a partnership agreement need to be in writing? • What is the most important part of a partnership? Explain your answer in detail

19. TODAY’S AGENDA • Turn in business plan • I am not accepting any FTC projects today. • Review types of partnerships • Learn about types of partners. • Create a chart to display their differences • REVIEW – PARTNERSHIP RACES • Read pg 588 when would a partnership agreement need to be in writing? • What is the most important part of a partnership? Explain your answer in detail

20. Finish Articles of Partnership • Read pg 588 when would a partnership agreement need to be in writing? • What is the most important part of a partnership? Explain your answer in detail

21. By Proof of Existence • partnership by proof of existence. • Forms regardless of the • label • intent

22. How do you prove existence? Prima Facie Evidence Evidence that is sufficient to raise a presumption of fact or to establish the fact in question unless rebutted. Proof like.. SHARING PROFITS A belief

23. By Estoppel Partnership by estoppel. Doing or saying something that leads the court to believe a partnership exists.

24. By Estoppel not a real partnership Then why are we learning about it? a way for the court to prevent injustice because someone has relied on the words or actions of another party and has acted accordingly.

26. Create a chart of the types of partners & their participation, relationship, & liability. Pg 591 • Use Visuals instead of words to help you remember. • Learn about Partnership property & MGMT

27. Types of Partners There are five types of partners: • General • Secret • Silent • Dormant • Limited

28. Type of Partner Participation in the Business Relationship to the Public Degree of Liability General Active Known Unlimited Secret Active Unknown Unlimited Silent Not active Known Unlimited Dormant Not active Unknown Unlimited Limited Not active Known Limited 27.2 Types of Partners

29. Complete Partnership Races

30. TODAY’S AGENDA • Finish Bus. Org Cases & turn in • People who were here on Friday, complete cases 18-23 pg 602 (HW for the others) • Absent on Friday= Notes over ch27-2 • Open note quiz today over ch 27-2 • REVIEW – bingo over ch 27 • HOMEWORK: study for ch 27 test.

31. Which of the following are partnership property? • A Truck that you own, used for business purposes, that has been repeatedly fixed by the business • A bulldozer that you let the company use, that they list on their account books • A laptop that the company uses on a daily basis & fixes regularly. • A camera that you let your partner use to take pictures of a job site.

32. Partnership Property • Does this laptop belong to me or the company? • Find out now! But how? • Has the partnership: • Consistently used property • Listed on account books • Paid expenses for • Repaired it • Paid taxes on it

33. Property Rights of the Partners • The right to use the property • Co-Owners: tenancy in partnership • The right to manage the firm • Equal voice (unless otherwise stated) • The right to share in the profits • Share Equally regardless of time or money invested.

34. Tenancy in partnership • What happens with the property if one partner dies?

35. The right to manage the firm Equal voice (unless otherwise stated) What if there is a disagreement? -majority decision WINS! -if there is an even # -no decision is made Unanimous Vote on (pg594) -changes in articles -nature of business -disposal of partnership

36. John invests more time & money in the firm. What does this mean in regards to his salary? Share Equally regardless of time or money invested.

37. Duties to the Partners • act in good faith & in the best interests of the firm. • use their best skill and judgment in looking after the firm’s affairs. • To be loyal to the firm and put the firm’s interests first.

38. PARTNER LIABILITY A partner loses control of a delivery truck and severely injured Sam Patterson. Can Sam can sue all of the partners even though they were not involved in the accident?

39. Liability of the Partners Unlimited Liability of debts incurred Even to the extent of their personal assets.

40. Liability of the Partners • Share Losses • Jointly liable • all the partners must be sued together.

41. Pre-Learning Question How do partnerships come to an end?

42. Dissolving a Partnership A dissolution - legal detachment. a change in the relationship any -partner stops being associated with the business. -DOES NOT HAVE TO BRING AN END TO BUS.

43. Effects of Dissolution If so, • New financial arrangements • Create new agreement • Public notice given to relieve retiring partners of new debt. • Determine how assets will be distributed.

44. Distribution of Assets Liabilities are paid in this order: • creditors • $ lent by partners. • original $ paid into the partnership by each partner. • The surplus, (what is left over)

45. You had a $100,000. You each paid $20,000 into the business. Your partner loaned the business an additional $10,000 to bail you out this year. You owe the bank $30,000. • What position will this put each partner in after dissolving the partnership?

46. Distribution of Assets If the business is insolvent: • Assets are sold to pay the creditors. • Partners are individually liable for any unpaid balance that the sale of the assets will not cover.

47. When Jess and Joe’s Café closed, they had $38,000 and owed $25,000 to creditors. Neither Jess nor Joe had any outstanding loans to the business, but each had paid $5,000 into the business to start it.

48. Will Jess and Joe get their money back? Will there be any additional money left over?

49. ANSWER Yes, Jess and Joe will get their money back. There will $3,000 left over. $38,000 – 25,000 = 13,000 –10,000 = $3,000.

50. Pre-Learning Question What is the Revised Uniform Partnership Act?