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| Charrah Hardamon - Customer Success Strategist, Reflektive |
A partnership is an association between two and 20 people who agree to own
and run a business together. All the partners contribute to the capital of the
business and have a say in the decisions making the process of the business.
All the partners keep the shares of the profits. The partnership is easy to set
up. A partnership agreement is prepared before the business starts. The
agreement includes the amount of capital invested in the business by each
partner, the tasks to be undertaken by each partner, the way in which the
profits would be shared, how long the partnership will last and the
arrangements for absence, retirement and so on. The partnership agreement is
extremely important. This helps in the future disagreements between the
partners.
There are many benefits of starting a business with partners. The
biggest benefit is the capital that's being invested. Partnerships have a great
source of finance which obviously sole traders don't have. All the partners
will contribute to the capital of the business which will make it easier for
the business to grow in the future. More capital will be invested and this
allows expansion of the business.
1) Responsibilities can be shared
All the partners can share the responsibilities. The responsibilities of running
the business can be shared. All the partners can work in different areas of the
business. One can specialize in the accounts department of the business, the
other can focus on the management. This will allow all the partners to
contribute to the day-to-day operations of the business. The business will
continue to operate if one of the business owners goes for a holiday. The
absence and holidays will not lead to major problems because there will be
other partners contributing to the business which will make things easier for
all the partner.
2) Losses can be shared
Sharing the profits is a drawback of partnership. All the owners of the
business have to share the profits made by the business. However, sharing
becomes a benefit when it comes to the losses. The owners of the business will
have the benefit of sharing the losses equally. If the business faces loss, all
the owners will be equally responsible for it, and everyone will contribute to
the losses made. The business will continue to run because everyone will lose
only a significant amount of money.
