An advance refers to a payment on account or a loan. It is particularly relevant in a partnership context, referring to amounts paid into the partnership that exceed agreed capital contributions. Under the Partnership Act 1890, such advances collect interest unless otherwise agreed by the partners. On dissolution, advances are repaid after external creditors but before the distribution of remaining capital to the partners.
A business entity is an organization established as a separate entity for the purpose of conducting business. It functions independently of its owners and has its own legal rights and obligations.
A 'Business Name' refers to the legal name under which a sole trader, partnership, limited liability partnership, or company conducts business activities. The selection of a business name is regulated by the Companies Act to prevent misleading names.
A comprehensive financial account in various types of business, recording different aspects of share capital, investments, and capital expenditures.
Chapter 11, often referred to as reorganization, allows a debtor, typically a corporation or partnership, to remain in business while restructuring its debts under a court-approved plan.
A legal arrangement by which property is owned by more than one person. Co-ownership can take several forms, including tenancy in common, joint tenancy, community property, partnership, and limited liability company (LLC).
A Cross Purchase Plan is a life insurance strategy used among business partners. Each partner buys a life insurance policy on the other partners to ensure business continuity and facilitate buyouts in the event of a partner's death.
A current account serves as an active account in the banking system where you can deposit and withdraw money via various mediums. It's crucial for personal, business, and international financial management.
A dormant partner, also known as a silent partner, is an individual who invests capital in a partnership but does not take an active role in its management or operations.
A drawing account is an account within a proprietorship or partnership used to track the withdrawals made by an owner. Typically closed at year-end, its balance is transferred to the owner's equity account or profit and loss account.
Drawings refer to the withdrawal of assets, typically cash or goods, from an unincorporated business by its owner. This concept is essential in differentiating between unincorporated businesses and corporations, and comprehending how owners can access business assets.
A firm is any business organization, ranging from individual proprietorships to large corporations, and it can also refer specifically to a business partnership.
A general partner is a member of a partnership who has unlimited liability for the partnership's debts and obligations, actively managing and operating the business.
Guaranteed payments for capital refer to payments made to a partner by a partnership, determined without regard to partnership income, specifically for the use of that partner's capital.
A form of business organization that combines features of a corporation and a partnership. Under U.S. law, joint stock companies are recognized as corporations, but with unlimited liability for their stockholders.
A junior partner is a partner in a firm who is limited as to both profits and management participation.
A Limited Liability Company (LLC) is an organization form in some states that may be treated as a partnership for federal tax purposes while offering limited liability protection to its owners at the state level. This entity may be subject to state franchise tax as a corporation. Two common forms of these entities are Limited Liability Companies (LLCs) and Limited Liability Partnerships (LLPs), which protect individual partners from the liabilities of other partners.
A Limited Liability Partnership (LLP) combines the benefits of traditional partnerships with limited liability. It provides flexibility in business operation while offering liability protection similar to corporations.
A limited partner's liability is restricted to his or her investment in the partnership. Limited partners are often passive investors and do not participate in the day-to-day operations of the business.
A Limited Liability Partnership (LLP) is a business structure that combines the benefits of a partnership with those of a corporation. It provides its owners with limited liability protection while still allowing for the pass-through taxation benefits of a partnership.
A partner is a member of a partnership, which could be a syndicate, association, pool, joint venture, or another unincorporated organization. Partners generally report their pro rata share of partnership income and deductions on their personal tax returns.
A Partner's Drawing is the amount withdrawn by a partner from the firm for personal use. These drawings are typically made against the partner’s share of profit or capital in the business.
An association of two or more people (partners) formed for the purpose of carrying on a business. Partnerships vary in legal structure and liability among partners and are specifically governed by laws and agreements.
A pass-through entity is a non-taxable business structure where income or expenses are passed directly to the owners, retaining their original character.
The Profit-Sharing Ratio (PSR) is a financial metric used to define how profits or losses are distributed among partners or stakeholders in a business or investment.
In a partnership, the revaluation account captures changes in the value of assets and liabilities when a new partner is admitted, or an existing partner exits. It ensures that these adjustments are equitably shared according to the partnership agreement.
Self-employed individuals work for themselves, without a formal employer, and include sole proprietors and partners in partnerships. They shoulder all business risks and responsibilities, paying self-employment tax in addition to income tax on their net income.
Shirkah refers to an essential concept in Islamic finance, embodying the idea of partnership and collaboration where two or more parties share profits and losses from a venture according to an agreed ratio, underscoring principles of risk-sharing and fairness.
A SEP-IRA is a retirement plan specifically designed for self-employed individuals and small business owners, allowing for tax-deferred growth of retirement savings.
A sleeping partner is an individual who invests capital in a partnership but does not participate in daily business operations. This person shares in the profits and bears the legal rights and obligations of ownership as specified in the partnership agreement.
A strategic alliance is a long-term partnership between two or more organizations that collaborate to achieve mutual benefits and gain a competitive advantage.
A syndicate is a collaborative group of individuals or companies formed to undertake a project that would be difficult to accomplish individually. It can be classified as a partnership or corporation for tax purposes.
An undertaking is any corporate body, partnership, or unincorporated association engaged in trade or business with the goal of earning a profit. Such entities are involved in economic activities and operate in various business sectors.
