Question - Read the following scenario:
Bob and Joe are considering the formation of a partnership to operate an adventure travel business. Both Bob and Joe have are former military Special Forces officers, and have extensive outdoors survival training. Their vision is to create a "vacation" business for those travelers who wish to learn these types of survival skills. Trips will be customized to the desires of each group and can include: hunting, rappelling, rock-climbing, emergency first aid training and other basic skills. They have come to you, a CPA, for advice on what type of partnership they should form and what other issues they should address in their partnership agreement. Both have $50,000 cash to invest, as well as some equipment. Bob has a Hummer worth $75,000, and Joe has 2 ATVs, plus camping, orienteering and hunting equipment worth $30,000.
As you consider their circumstances, discuss the following questions in your initial post:
What type of partnership would be most appropriate and why?
How should they allocate profits and losses?
Should they record salary and bonus allowances?
What other issues do you feel are relevant and important for them to consider?