Sports Bar a Partnership Firm Would Be

Sports Bar

A partnership firm would be the best choice for Lou and Jose sports bar and restaurant business. To form a partnership, four criteria must be fulfilled: partnership must have two or more persons; the same persons must be caring the business, business must be for profit, and all persons must be co-owners. Lou, Jose, and Miriam will be co-owners for-profit business and Lou and Jose will be caring daily duties of a sports bar and restaurant. However, in a partnership control is shared by all the partners. Every decision is made on the understanding and agreement between all the partners. Lou and Jose will have general partnership while Miriam as an investor partner will not control business activities.

The reason a partnership firm would be the best choice is because neither of them have much money and Miriam is willing to be the investor who will not participate in the business but will expect in return a percentage in return. Lou and Jose as partner will earn a percentage of the sports bar and restaurant profits. Lou, Jose, and Miriam must consider the laws and regulations in starting the business, and all the risks the involved because they must protect themselves against all risks. Because there are, two types of partnerships Lou and Jose must choose which general or limited partnership. Lou and Jose should enter general partnership because this will leave equally liable for the businesses and any future debts or judgments that may occur against the business. In order for Lou and Jose to start their business as a partnership firm, some laws, and legal regulations need considered on both partners before making a contracts of partnership.

According to Partnership (n.d.), "The first step in creating a partnership is reserving a name, which must be done with the secretary of state's office or its equivalent" (¶1) the next step would be to form a written agreement. Lou and Jose will need to write a partnership agreement. However, before doing this they should consult a lawyer because this will allow Lou and Jose to know their rights and responsibilities as partners. According to Partnership (n.d.), "The Uniform Partnership Act defines the basic rights and responsibilities of partners. Some of these can be changed by the partnership agreement, except, as a general rule, those laws that govern the partners' relationships with third parties." (¶3) Lou and Jose then must file a partnership documentation with the state office in the state the business will be operating in and record the business's name to obtain a license.

The Limited Liability Partnership (LLP) will provide Lou and Jose individual protection against personal liability for certain partnership liabilities. Liability of Lou, Jose, and Miriam will not be the same. Lou and Jose will have unlimited liability as they will carry business while Miriam will have limited liability as the investor partner. Lou and Jose will need to follow law regulations when opening business especially restaurant where alcohol will be served. Lou and Jose will need to obtain license to serve alcohol (liquor license) which will need to be hanged in the restaurant; they will probably need to pay extra insurance for serving the alcohol Partners should determine liability among them and put it in writing. "The parties can agree to almost any terms in their partnership agreement, except terms that are illegal" (Cheeseman, 2010, p. 255).

Because Lou and Jose will be running a bar, they must file with the Tax and Trade Bureau (TTB) and fill out an application for a permit along with all necessary documents. According to Alcohol and Tobacco Tax and Trade Bureau (n.d.), "The applicant must obtain written approval from TTB BEFORE engaging in business." (¶2)

According to the IRS (2010) if you are a partnership, partners may be liable for annual return of income, and employment taxes. Lou and Jose must obtain an Employer Identification Number (EIN) to identify their business entity. Lou and Jose can apply for an EIN online. Another important aspect is record keeping. Record keeping will help monitoring their business progress, financial statements, receipts, and keeping track of their deductible expenses, for their tax returns.

Basic Steps to Start Sports Bar and Restaurant