1.5.4 Forms of business - Partnerships

Question 1

Partnerships

How many people are partnerships usually between

Answer 1

When there is a joint ownership of Running a business

• Usually between 2-20 people

Question 2

What will joint owners share

Answer 2

Joint owners will share responsibility as well as profits

Question 3

Advantages of Partnerships - 5

Answer 3

• More owners - more capital (more money going into the business essentially)
• More owners = more skills (specialisation) - usual for partners to specialise e.g in finance, tax law
• Shared pressure/responsibility, No burden placed when illnesses/absences from owners happen
• Easy to set up no legal formalities + less bureaucracy e.g registration process, reporting to gov. about finance
• Income tax (taking the biz)

Question 4

Disadvantages of Partnerships

Answer 4

• unlimited liability
• split profits - have to share them
• Conflict may arise between partners during decision making - business may not move forward

Question 5

What is in place to avoid conflict from arising

Answer 5

A deed of Partnership

Question 6

A Deed of partnership

What type of things does this deed include

Answer 6

A legal document which includes a framework/rulebook of partnerships and how they’re going to operate

• include things such as :
  Decision making
  Profits & Losses, how they are split