LO1: partnerships

Question 1

What is a partnership?

Answer 1

a business run by 2 or more people aiming to make a profit.

Question 2

what is the deed of partnership?

Answer 2

an agreed legal document that outline the rules by which a partnership will be run.

Question 3

what does a deed of partnership normally include?

Answer 3

-who the partners are
-how much each partner has invested

Question 4

what is a limited partnership?

Answer 4

one where at least one partner does not play an active role in the business. they have a safety net of limited liability.

Question 5

limited liability partnerships are…

Answer 5

a mix of partnerships and private limited companies

Question 6

what three key differences do limited liability partnership to ordinary partnerships?

Answer 6

• Incorporated:own legal identity
• limited liability: personal possessions are not at risk
  -must submit copies of their accounts

Question 7

advantages of partnerships? (6)

Answer 7

-easy to set up
-little capital
-capital can be easy to obtain from partners
-responsibilities and decisions can be shared
-allows family ownership
-accounts can remain private

Question 8

disadvantages of partnerships? (4)

Answer 8

-external capital may be difficult to obtain.
-possible disagreements
-ordinary partnerships have unlimited liability
-complications if partners leave or join.