Chapter 2 I. Business structures that may be registered as brokerage

Chapter 2 I. Business structures that may be registered as brokerage entities Flashcards

• General Partnership (1 of 4)1. Characteristics 1. can be either formed by a written contract, oral contract,

or implied by the partner's actions.2. Each of the parties is liable for any debt accrued by the business, and each general partner is personally liable for any misconduct that has taken place within the business3. Each of the parties will have an agreed share of the business along with any profits and may own varying percentages of the business.4.Partners are taxed once on their respective partnership profits; partnerships do not have double-taxation.

• Sole Proprietorship 1 of 41. individual has full ownership of the business and takes

on full responsibility and liability for his or her actions within the business, and also for the actions taken by any of their employees.2. broker may register the sole proprietorship either in his or her own name or may use a trading name.3.least startup costs as compared to other business entities.4. A sole proprietorship is not a separate legal entity, like a partnership or a corporation. Therefore, it is the business owner that assumes all legal and tax liability.

• Sole Proprietorship (3 of 4)2. Dissolution 1. Notify clients and vendors and ensure to pay all

outstanding invoices and complete any outstanding contracts.2. Pay any outstanding sales tax, deactivate the sole proprietor's tax ID number, and cancel all business licenses.3. All bank accounts associated with the business, including credit agreements, utility supplies, and any lease agreements should be terminated.4. File final tax paperwork for the business.If the sole proprietor has over 100 employees, they must adhere to employment law, written notice, and supply their employees with the correct paperwork prior to dissolution.

• Limited Partnership (4 of 4)4. Dissolution 1. business' activities should be "wound up."2. State

licensing law and legislation should be followed, and a3.Certificate of Dissolution should be filed to the Secretary of State.4. The "winding up" process begins, only upon the

following occurrences:a) A breach or an event specified in

the partnership agreement that results in dissolution of the partnershipb) The willful consent and signatures of all general partners and all limited partnersc) After the dissociation of a person as a general partner

• Limited Liability Partnership (1 of 2)1. Characteristics1. Protection: Limited Liability Partnership provides liability

protection similar to protection offered to limited partners in

a limited partnership.It is a business entity that protects the partners from personal liability against the acts of the partnership.2. Individual partners and their employees or agents are not liable for the acts or debts of other individual partners, which is the case with a general partnership

• Limited Partnership (1 of 4)1. Characteristics 1. one or more limited partners and one or more general

partners.2. General partners are wholly responsible for business operations3. limited partners are investors who participate only in business profits.4. general partner acts as not only the "goal-setter" for the business but is also responsible for all business operations.5. Differences

between General and Limited:a) General partners are fully

responsible for the business operations, and usually, receive salaries equal to their business responsibilities.They are solely liable for all debt or obligations placed upon the limited partnership.b) Limited partners, however, are investors in the business partnership, where investment is made in either cash or property. They only participate in business profits and have limited liability. Limited liability would include any unpaid investment, or any profit distributed to them if received after the business was made insolvent. Limited partners are taxed on the profits they receive from the partnership.

• Limited Liability Partnership (2 of 2)3. Dissolution1. partner within an LLP may be disassociated by the other

partners: death, incompetence, bankruptcy, or expulsion.2.

partner may disassociate himself from the partnership, at will, at any time. does not result in the dissolution of the business as the partnership agreement may contain certain conditions in order to allow the remaining partners to

continue business3. Dissolution requires:a) All partners

must agree to the dissolution of the partnership.b) If one partner wishes to dissolve the partnership, he or she must request a judicial dissolution.i) An event or breach must take place, stated in the partnership agreement, which results in dissolution.Once dissolution is in progress, the partners must adhere to state law and file a Certificate of Dissolution.4. Assets need to be liquidated and distributed amongst the partners, along with paying debts and notifying vendors and employees.The state licensing and registration laws of "winding up" the business will then take place.

• Limited Partnership (3 of 4)3. Registration RequirementsA Limited Partnership can register with the DRE to broker

real estate with the following conditions:1. At least one

General Partner must be an active Florida real estate broker.2. Sales associates and broker associates cannot participate as general partners.3. Any unlicensed individual acting as a general partner (he or she must not provide real estate services) must register his or her name and address with the DRE.Anyone, including sales associates and broker associates, can be a limited partner provided he or

she does not act in the capacity of a General Partner.NB. It is important to note that sales and broker associates are not permitted to register as general partners of a real estate brokerage but are permitted to act as limited partners.Furthermore, limited partners do not have to register with the DBPR. If there is only one actively licensed broker within the partnership and they resign or are unable to continue with the business, then the real estate brokerage limited partnership must inform the DBPR and register a new actively licensed broker within a 14 day time period, or the limited partnership registration would be automatically canceled and all licensed sales associates and brokers associates licenses would become involuntarily active.

• Sole Proprietorship 2 of 41. Characteristics 1. most common form of business entity because it is very

lightly regulated,2. ownership may be freely transferred,3.easy and inexpensive to establish4. simplicity results in lower administrative and legal expenses5. ease and flexibility of not having to answer to anyone regarding the business operations or having to disclose financial information to other persons financially interested in the business.6. defined as a business composed of one