Partnerships

A partnership is a business owned by two or more people. Its advantages and disadvantages are very similar to the sole-proprietorship.  Two forms of partnership exist. In the most common form, the general partnership, all partners are responsible for financial obligations and management of the business. In a limited partnership, while having contributed to funds to finance the business, at least one partner is not active in the daily running of the business.

Some advantages of a partnership include:

• ease of start-up
• no special taxes on a partnership
• easier to raise capital through bank loans or new partner

Some disadvantages of a partnership include:

• partners are responsible for the acts of each other, except in a limited partnership where the limits are spelled out
• limited life (partnerships ends if a partner leaves)
• potential for partner conflicts

Objectives:

• Describe the characteristics of a partnership
• Explain some of the advantages and disadvantages of a partnership

Here is a link to a resource that explains how to avoid partnership problems.

Homework: Read ch. 3-3 and don’t forget the initiative essay is due Monday the 26th.