Advanced Decision-Making for Partnerships
KNOWLEDGE EXPECTED OF: CFP® Professionals Only
- Explain types of partnerships.
- Limited liability
- Define types of partners with respect to their participation in a partnership.
- Explain responsibilities that a general partner has with the partnership.
- As a principal of the partnership
- As an agent of the partnership
- Explain risks from participation in a general partnership.
- To a general partner from participation in a general partnership
- To a general partner in a limited partnership
- Explain risks to a limited partner from participation in a limited partnership.
- Explain risks to a limited liability partner from participation in a limited liability partnership.
- Explain circumstances that may cause a partnership to be terminated, such as:
- Death of a partner
- Incapacitation of a partner
- Withdrawal of partner
- Bankruptcy of partner
- Explain how each of the factors may impact the suitability of operating a business as a partnership, such as:
- Dynamic of personal relationship
- Cost and time commitment of regulatory requirements to maintain business registration
- Desire for control
- Working capital required and available
- Business’ probability of liability
- Income expectations
- Tax impact
- Need to obtain financing
- Expectations for growth of business
- Expectations for business after death or disposition by owner
- Number of employees
- Evaluate how each of the factors may impact the suitability of operating a business as a partnership.
Glossary of Verbs (mouse over to see definition)
To state exactly the meaning of
To be aware of / to recognize and correctly name / to locate an appropriate resource
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
To note the similarities and differences between two or more things
To determine an approximate value for
To find the value using mathematics
To change from one form or purpose to another
To reach a conclusion or make a judgement through careful study
To give the meaning of / to construe or understand / to translate orally