1. Identify the Advantages and Disadvantages of Partnerships
Lesson C4-2
Illinois CTE
Curriculum Revitalization Initiative
Business Management & Marketing

2. IL CTE- Business Management & Marketing
Lesson Objectives
Explain the partnership legal form.
Identify the advantages and disadvantages of a partnership.
Examine the similarities and differences between a sole proprietorship and a partnership.
Discuss how to make a partnership work.
IL CTE- Business Management & Marketing

3. IL CTE- Business Management & Marketing
Terms
general partner
limited partner
partnership agreement
partnership
IL CTE- Business Management & Marketing

4. What would make a person a good business partner?
IL CTE- Business Management & Marketing

5. IL CTE- Business Management & Marketing

6. IL CTE- Business Management & Marketing

7. IL CTE- Business Management & Marketing

8. IL CTE- Business Management & Marketing

9. Similarities between a sole proprietorship and a partnership
Start-up costs are relatively low.
Both have unlimited liability. Sole proprietors are liable for all claims against the business. General partners are liable for all claims against the business; limited partners are liable only for the amount of their investment.
Taxation: The profits or losses pass through to the owner to be taxed at his or her individual tax rate.
Management control: A sole proprietor has full control; general partners have full control.
IL CTE- Business Management & Marketing

10. Differences exist between a sole proprietorship and a partnership
Number of owners: A sole proprietorship has one owner; partnerships have two or more owners.
Profits: A sole proprietor keeps all the profits; partners share the profits.
Decisions: A sole proprietor makes all the decisions; partners share the responsibility of making decisions.
IL CTE- Business Management & Marketing

11. How can the probability of survival in a partnership be improved?
A partnership has the greatest chance of survival when partners:
share business responsibilities
record everything in writing
communicate openly and honestly about how the business is doing.
IL CTE- Business Management & Marketing

12. Partnership Agreement
Establish this in advance.
Explains the rights and responsibilities of each of the owners, in writing
IL CTE- Business Management & Marketing

13. What a partnership agreement identifies
Name of the business or partnership
Filing of an application for a Certificate of Doing Business Under an Assumed (DBA) name when using a name other than the name of the owner(s)
Names of the partners
Type and value of the investment each partner contributes
Managerial responsibilities to be handled by each partner
Accounting methods to be used
Rights of each partner to review and/or audit accounting documents
IL CTE- Business Management & Marketing

14. What a partnership agreement identifies, cont.
Division of profits and losses among the partners
Salaries to be withdrawn by the partners
Duration of the partnership
Conditions under which the partnership can be dissolved
Distribution of assets upon dissolution of the partnership
Procedure for dealing with the death of a partner
IL CTE- Business Management & Marketing