partnership formation

• Two kinds of partnership formation:

  1. Two or more individuals form a business for the first time.

  2. An individual forms a business with a sole proprietor or sole proprietorship/s converted into a partnership
• Steps for converting a sole proprietorship into a partnership:

  a. Revalue assets owned, liabilities owned, and capital of the sole proprietor/s.

  b. Close the existing books of the sole proprietorship/s.

  c. Record the investment of all the partners in the new set of partnership books