Partnership
Definition: a business that is owned by two or more co-owners called partners.
Partners share profits and are legally responsible for debts. Each partner contributes to the money, property, labor or skill. Both partners share the profits and losses. In a partnership there is legal agreement since there are two people involved with the decision-making process. The agreement documents the future of the business, how the partners will split the profits, change ownership, and resolve problems.
The types of agreement include:
1. General Partnership - This assumes that profits, liabilities and management duties are split between partners. When there is an unequal distribution, the percentages must be documented.
2. Limited Partnerships - These allow both involved parties to have limited liability and limited input with management decisions. The limits depend on the percentage of the investment.
3. Joint Ventures - Are basically a general partnership but for a limited period of time for a single project. Partners can be recognized as an ongoing partnership if they continue the venture.
Examples:
1. Some law offices
2.Some medical offices
3. Some advertising agencies
Examples in Indiana:
1. Bose McKinney & Evans - boselaw.com
2.Dr. Bailey & Wright - baileywrightdentistry.com
3. Bradley & Montgomery - bamideas.com
Advantages:
1. Cheap and Easy - Partnerships are not as expensive to form as corporations and not as time-consuming. The majority of the time is spent developing the partnership agreement.
2.Shared Profits - Each partner is equally responsible for the company and is equally invested. Partners have the advantage of pulling skills from each other. They can work together in order to make the best possible company.
3. Incentives for Employees - Partnerships can offer employees the advantage of becoming future employees of the company. This may attract motivated and skilled workers.
Disadvantages:
1. Disagreements - Partners may have disagreements which could cause problems within the business.
2. Joint Liability - Partnerships share liability between owners. Both partners are responsible for debts and decisions.
3. Shared Profits - Partners share the company but if there is an unequal contribution this may cause problems between the partners.
Partners share profits and are legally responsible for debts. Each partner contributes to the money, property, labor or skill. Both partners share the profits and losses. In a partnership there is legal agreement since there are two people involved with the decision-making process. The agreement documents the future of the business, how the partners will split the profits, change ownership, and resolve problems.
The types of agreement include:
1. General Partnership - This assumes that profits, liabilities and management duties are split between partners. When there is an unequal distribution, the percentages must be documented.
2. Limited Partnerships - These allow both involved parties to have limited liability and limited input with management decisions. The limits depend on the percentage of the investment.
3. Joint Ventures - Are basically a general partnership but for a limited period of time for a single project. Partners can be recognized as an ongoing partnership if they continue the venture.
Examples:
1. Some law offices
2.Some medical offices
3. Some advertising agencies
Examples in Indiana:
1. Bose McKinney & Evans - boselaw.com
2.Dr. Bailey & Wright - baileywrightdentistry.com
3. Bradley & Montgomery - bamideas.com
Advantages:
1. Cheap and Easy - Partnerships are not as expensive to form as corporations and not as time-consuming. The majority of the time is spent developing the partnership agreement.
2.Shared Profits - Each partner is equally responsible for the company and is equally invested. Partners have the advantage of pulling skills from each other. They can work together in order to make the best possible company.
3. Incentives for Employees - Partnerships can offer employees the advantage of becoming future employees of the company. This may attract motivated and skilled workers.
Disadvantages:
1. Disagreements - Partners may have disagreements which could cause problems within the business.
2. Joint Liability - Partnerships share liability between owners. Both partners are responsible for debts and decisions.
3. Shared Profits - Partners share the company but if there is an unequal contribution this may cause problems between the partners.
Prompting Question: If you were in a partnership, what skills would you contribute?
[email protected] Social Studies Date Created: May 2, 2013 Updated: May 18,2013