Partnerships

Question 1

What is a Partnership?

Answer 1

A business or organisation that is usually owned by 2-20 people where decision making responsibility is shared, for example solicitors, accountants, or private doctors.

Question 2

What are the advantages of being a partnership?

Answer 2

• No much responsibility - split work load.
• Have lots of people to rely on.
• Shared expertise and experience.
• Partners cannot try to take more money due to contacts and legal documents.
• More capital - helps business in terms of expansion, and start up costs.
• Specialisation.
• Increased opportunity to raise finance.
• More people - more management and money.

Question 3

What are the disadvantages of being a partnership?

Answer 3

• Have to sign lots of contracts.
• Difficult to set up.
• Sharing of responsibility between partners can lead to disputes which can affect the business.
• Unlimited liability unless registered as a limited liability partnership.
• Share profit.
• Partners may leave - dissolve in partnership, or it may end and have to give them half of the profits.

Question 4

What are the two types of partnerships?

Answer 4

• General partnership.

- Limited liability partnership.

Question 5

What is the deed of partnership?

Answer 5

A legal document that dictates who and what people are entitled to.