Unit 1 - PARTNERSHIPS

Partnerships

Some businesses either set up as, or become, partnerships.  They share responsibility for the running of the business.  A partnership can have between 2 and 200 partners.  Many professional people become partners, such as doctors, lawyers and architects as well as other businesses that wish to become larger.  Most partnerships sign a DEED OF PARTNERSHIP before they set up so that the main points about the running of the business are decided in advance to reduce disputes later.  The advantages of setting up a partnership include:

  • There are people to share problems with
  • More capital and expertise is available to the business
  • Sleeping partners, who take no part in the management of the business but who put in money can be taken on.  They are given LIMITED LIABILITY; if the business goes bankrupt they only lose what they put into the business.

The disadvantages include:

  • Most partnerships break down because of disagreements between partners
  • There still may be shortages of capital and expertise
  • There is still no continuity – if one of the partners dies or leaves the  business it will have to be dissolved or reformed
  • At least one partner must have unlimited liability

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