PRACTICAL LESSONS LEARNED

Though the Limited Partnership has been adopted in all states of the USA, not all limited partnership statutes are created equal. Some are much better than others, and some are worse. It’s important to be in compliance with state law requirements, remembering of course that some states have far more formality requirements than do others. Here are some useful suggestions.

• As a preference, make use of those jurisdictions where the limited partnership statute is not invasive of every partner’s privacy. Some states want each partner’s name and address, even if they are not the (managing) general partner. Other states are far more respectful of privacy and only require the contact information of the General Partner.
• Be sure to file any Annual Report. In the better jurisdictions, this is normally just a statement of who the general partner is, along with their address. In others, it is more detailed and requires a financial report.
• Use the Limited Partnership for its intended and proper purpose. It should have a ‘business purpose’, i.e. controlling and holding investment assets such as the stock of corporations, limited liability company ownership interests, investment trading accounts, mutual funds, etc.
• The Limited Partnership should not be treated as if it’s your
  Implementation of the Purchase Process: Partnership or Supplier
  Do you recognize this. You arrive at the store for a new mobile phone and just the model you had targeted is not available... It is a simple example, but stock delivery could make all the difference in you business.There are two main options in managing your supplies and suppliers. One in the client-supplier relationship and the other in a partnership.The advantage of the client-supplier relationship is that you are most flexible. You should take this construction if you are just starting with a new purchase process. Another advantage is the cost of this construction. You choose the supplier with the best cost-quality-ratio.Another situation in which the client-supplier relation is often preferred is for a product oriented business. Products characteristics are easy to compare and this facilitates the supplier selection.This is where partnerships are more profitable; for service oriented companies that are dependent on the input (service and or product) o
  AL LESSONS LEARNED

  Though the Limited Partnership has been adopted in all states of the USA, not all limited partnership statutes are created equal. Some are much better than others, and some are worse. It’s important to be in compliance with state law requirements, remembering of course that some states have far more formality requirements than do others. Here are some useful suggestions.

  • As a preference, make use of those jurisdictions where the limited partnership statute is not invasive of every partner’s privacy. Some states want each partner’s name and address, even if they are not the (managing) general partner. Other states are far more respectful of privacy and only require the contact information of the General Partner.
  • Be sure to file any Annual Report. In the better jurisdictions, this is normally just a statement of who the general partner is, along with their address. In others, it is more detailed and requires a financial report.
  • Use the Limited Partnership for its intended and proper purpose. It should have a ‘business purpose’, i.e. controlling and holding investment assets such as the stock of corporations, limited liability company ownership interests, investment trading accounts, mutual funds, etc.
  • The Limited Partnership should not be treated as if it’s your
    Living Proof of The Joint Venture Mindset
    Frank Schroeder was one of the most successful insurance salesmen I ever met. He owned two Porches and two sets of electric drums and lived like a king. We did some business together and I asked him what the secret to his success was. And at this point I must digress. I have sold insurance very successfully in Canada and in South Africa. I no longer sell insurance; I specialize in Joint Ventures. But I have found very few insurance salespeople who share Frank’s philosophy or his success. Many of them have very strange labels and titles that they have concocted for themselves in order to disguise the fact that they sell insurance, yet they should be proud of their important work. And they are so focused on selling that they are proof of the self-fulfilling prophecy syndrome. But let us not waste time discussing what we should not do.Frank was living proof of the power of what I call “The Joint Venture Mindset”. As far as I can recall, I will try to put his approach in his own wo
    r more formality requirements than do others. Here are some useful suggestions.
    • As a preference, make use of those jurisdictions where the limited partnership statute is not invasive of every partner’s privacy. Some states want each partner’s name and address, even if they are not the (managing) general partner. Other states are far more respectful of privacy and only require the contact information of the General Partner.
    • Be sure to file any Annual Report. In the better jurisdictions, this is normally just a statement of who the general partner is, along with their address. In others, it is more detailed and requires a financial report.
    • Use the Limited Partnership for its intended and proper purpose. It should have a ‘business purpose’, i.e. controlling and holding investment assets such as the stock of corporations, limited liability company ownership interests, investment trading accounts, mutual funds, etc.
    • The Limited Partnership should not be treated as if it’s your
      Is Working 18 Hour Days Part of Your Business Vision Statement?
      You've heard the sob stories.Seems like every business owner has his or her own story of working 18+ hours a day, seven days a week to get there business off the ground. If you get a group of business owners together, they all start moaning about how hard they work."I haven't had a day off in five years." one says."80 hours is a good week." another complains.Does it really have to be that way? Is that your business vision? The big question is, are you self-employed, or are you a business owner? They are not the same thing. If you are self-employed, your business depends on you.You are the person doing the work that brings in the money that pays the bills so that you can work even harder to do the work and pay the bills and on and on and on. If you are self-employed, don't be surprised if you are working more than employees.After all, you not only do the work of an employee, you also are responsible for all the support tasks that make tha
      tes are far more respectful of privacy and only require the contact information of the General Partner.
    • Be sure to file any Annual Report. In the better jurisdictions, this is normally just a statement of who the general partner is, along with their address. In others, it is more detailed and requires a financial report.
    • Use the Limited Partnership for its intended and proper purpose. It should have a ‘business purpose’, i.e. controlling and holding investment assets such as the stock of corporations, limited liability company ownership interests, investment trading accounts, mutual funds, etc.
    • The Limited Partnership should not be treated as if it’s your
      Verisign Fraud - Class Action Lawsuit Settlement
      BackgroundUnited States district court, northern district of California was the start of Verisign’s (“the Company”) class action complaint for a violation of securities laws. Plaintiff, James H. Harrison Jr., on behalf of himself and all others similarly situated filed vs. Verisign, Inc., Stratton D. Sclavos, Robert J. Korzeniewski, Dana L. Evan and Quintin P. Gallivan. The “class” period is for people who purchased shares of the company between January 25 and April 25 2002.The defendant Verisign is headquartered in Mountain View California and offers users the ability to engage in secure digital commerce and communications. Verisign’s stock is traded on the NASDQ national market.AllegationsThe allegation is that the defendants tried to artificially increase the Company’s revenue and create the perception that its deferred revenue was being generated organically rather than through acquisition. It is claimed that the Co
      the Limited Partnership for its intended and proper purpose. It should have a ‘business purpose’, i.e. controlling and holding investment assets such as the stock of corporations, limited liability company ownership interests, investment trading accounts, mutual funds, etc.
    • The Limited Partnership should not be treated as if it’s your personal piggy bank. Ensure that the Partnership Agreement states one or more specific and well-drafted business purposes.
    • Have the Limited Partnership Agreement drafted by an attorney with experience in this area of the law. There are business entity filing providers (incorporators) who don’t know what they’re doing and they tend to provide a ‘generic’ agreement that is a gross disservice to their customers. The partnership agreement should be drafted by an attorney.
    AVOIDING IRS PROBLEMS

    A series of cases which culminated in 2005 (the Strangi cases) examined the misuse of Limited Partnerships, particularly as to their misuse claiming deep tax discounts where the founder of the Partnership basically treated the assets of the Partnership as his own despite claiming to transfer them to the FLP. To avoid IRS problems, here are some ‘lessons learned’ to consider:

    • Don’t set up a Limited Partnership as part of your estate plan primarily for tax reasons. That is not a legitimate ‘business purpose’. Doing so only asks for trouble.
    • The IRS considers it abusive to put all of your personal assets into the Partnership. Keep a sufficient amount of funds and accounts outside the Limited Partnership that will provide for your lifestyle for the rest of your life expectancy.
    • The co