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LSDefine
Simple English definitions for legal terms
capital contribution
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A quick definition of capital contribution:
Capital contribution: When people start a business together, they might each give money, things they own, or work they do to help the business get started. This is called a capital contribution. It's like everyone is putting in a little bit to make the business stronger.
A more thorough explanation:
Definition: Capital contribution refers to the cash, property, or services that partners contribute to a partnership.
Example: John and Jane decide to start a business together. John contributes $50,000 in cash, while Jane contributes a property worth $100,000. These contributions become part of the partnership's capital.
Explanation: In a partnership, each partner contributes something of value to the business. This can be in the form of cash, property, or services. These contributions become part of the partnership's capital, which is used to fund the business operations. In the example above, John and Jane's contributions of cash and property become part of the partnership's capital, which can be used to purchase inventory, pay for expenses, or invest in the business.