Partnership

A firm owned by two or more people and bound by the terms of a legal document known as a partnership agreement There are two different types of partnerships

Limited or General A limited partnership consists of limited partners and one general partner Limited Partners cannot take part in the management and are only liable for business debts up to the amount of their original investment Most times a general partnership is made up of many partners who all work together to manage the company Each partner has unlimited personal liability for business losses and debts

Size and Ownership Partnerships are owned by two or more people Company which are partnerships can have from only a few employees to hundreds or thousands however the company is only owned by two or more people

Decision Making Business owners share the decision making process This can cause problems within the company if a disagreement does occur

Investor Liability In a general partnership all partners have the same amount of liability when it comes to debts and losses In a limited partnership the limited partners are only liable for the amount of debt that matches the amount of money they first invested

Profit distribution Equally Unequally as decided by the initial agreement of the partners Some partners can own unequal amounts within the company Bonus to managing partner based on net income

Factors attracting investment and capital High personal motivation Few legal expenses and restrictions Appeals to people who prefer not to do business by themselves Satisfaction and pride Attract more capital Banks sometimes offer a lower interest rate for partnerships

Pros Shared start-up cost Responsibilities and work are equally shared Shared business risks and expenses Two people have more ideas then a single partner Mutual support and motivation

Cons If your business goes under and your partner skips town the other partner owes all the money Shared profits. Control over the business is shared Decisions are shared A friendship may not survive a partnership

Examples The MidTown -A bar in downtown Halifax -Owned by three people however they do not have equal shares within the -This local business is a bar and grill and at night time turns into a club