Partnerships Flashcards
What is a partnership?
This is where 2-20 partners work together in a business. Examples of partnerships are solicitors, doctors, dentists and accountants.
What is the Deed of Partnership?
An agreement between a group of partners setting out the legal relationship under which the partnership is set up, how profits and work will be shared out etc.
What is the Articles of Association?
A document setting out the details of the internal relationships that exist within the company. For example, when company meetings will be held and also how directors will be chosen etc.
Who owns the business in a partnership?
The partners.
Who controls the business in a partnership?
The partners.
Who manages the business in a partnership?
The partners.
How is finance raised in a partnership?
It is raised by the partners through person savings or capital borrowed from the bank.
Who does the profit go to in a partnership?
The partners.
What is included in a Deed of Partnership?
- Names of partners and the business.
- Addresses of partners and the business.
- Amount of capital invested by each partner.
- How profits will be shared.
- Rules that will ensure the fair running of the business. (for example, working hours, holidays and responsibilities)
- Arrangement in case a partner falls ill or dies.
What are the advantages of a partnership?
- More owners means more capital generated.
- Work can be shared.
- Partners can specialize in what they do best.
- Partners can cover for each other during holidays.
- Financial details of the partnership are private.
What are the disadvantages of a partnership?
- Profits must be shared between partners.
- All partners have unlimited liability expect from sleeping partners.
- Partners have to consult each other before decisions are made.
- Decision making can be slow.
- Partners may disagree about the running of the business.
- Each partner is legally responsible for the actions of the others.
