Wednesday, August 20, 2008
Overview of Partnership Issues
This post, written by the Deal Professor, Steven M. Davidoff, at the New York Times Deal Book Blog, provides a nice overview of some of the issues implicated by different types of business entities. Don't be overwhelmed by this -- there are a number of complicated concepts here. Absorb what you can, and if you are confused or lost, know that by the end of the semester, this will make a lot more sense.
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This article spells "TRUTH" in the business world.
Having been in public practice for the past 20 years, I have seen the days when personal liability in general partnerships was the top priority of every partner, where today, by setting up a different business entity, i.e. a corporation, the liability over time can be redirected from the indvidual owners to the equity of the corporation, thus allowing the business, banks, and investment houses to declare bankruptcy, or not honor their debts with very little if any personal liabilty, and ultimately having the Federal Government allow them to borrow their way out of financial trouble with zero interest loans that, we as future graduating attorney's will help pay back in the future.
I agree with the article and have experienced the fact that when people are financially on the hook personally vs. using the shield of a business entity, the business perspective/decision making process changes drastically.
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