A business partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor, or skill, and expects to share in the profits and losses of the firm.
In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. However one thing a partnership needs is an openness and trust between the partners. Without this in place the partnership is doomed to failure.
It is important that all of the Partners should have a written legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved. As to future partners and how they will be admitted to the partnership, and how partners can be bought out, or what steps will be taken to dissolve the partnership when needed.
Maybe it's hard to think about dissolving a business when it is just getting started, but many partnerships split up at crisis times and unless there is a defined process, there will be even greater problems. They also must decide up front how much time and capital each will contribute, etc.
A partnership is like a ship setting out to sail around the world, where it will face all sorts of danger and rough weather. It will need the trust and team spirit, of all concerned for it to arrive safely at its destination.
Advantages of a Partnership
* Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement. * With more than one owner, the ability to raise funds may be increased. * The profits from the business flow directly through to the partners' personal tax returns. * Prospective employees may be attracted to the business if given the incentive to become a partner. * The business usually will benefit from partners who have complementary skills.
Disadvantages of a Partnership:
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