Partnership Business
A partnership is a legal form of business with two or more owners. Partners legally share a business assets, liabilities, and profits according to the terms of a partnerships agreement.
The law does not require a written partnerships agreement, also known as the articles of partnerships, but it is wise to work with an attorney to develop an agreement that documents the status, rights and responsibilities of each partner.
The partnerships agreement is a document that states all of the terms of operating the partnership for the protection of each partner involved. Banks often want to review the partnerships agreement before lending the business money.
A Partnership can be regarded as an improvement on sole proprietorship form of business organization, the minimum number of people that can form a partnerships is two, while the maximum is twenty, with the exception of partnerships comprising professionals; for example, lawyers, accountants, doctors, to mention just a few. Notably, most partnerships are usually formed by professionals and those that engage in service oriented business concerns.
Advantages of Partnership:
The following are the advantages of Partnerships
• Easy to establish
• More financial resources
• Shared management and pooled /complementary skills and knowledge
• Division of profits
• Minimum governmental regulation/limited legal restrictions
• Flexibility
• Freedom from double taxation
• Secrecy
• Longer survival
Disadvantages of Partnership:
The following are the disadvantages of Partnerships
- Unlimited liability
- Division of profits
- Disagreement among partners especially with regard to authority and control
- Difficult to terminate because partners are bound by the law of agency
- Restrictions on transfer of ownership
- Lack of continuity
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