Definition of a Partnership A partnership consist of two (2) to 20 part owners engaged in business with a view to making a profit.
Characteristics ofPartnerships Partners usually run their business based on what is written in their partnership deed. In the absence of this deed, partners make reference to the British Partnership Act of 1890. This act, among other things, states that profits and losses are to be shared equally. Agreement on the conduct of the business is usually by unanimous vote.
Characteristics ofPartnerships Such businesses should be registered with the Companies Office of Jamaica who will require information such as the name of the business, type of business, names and occupations of the partners, etc. Partners will either share management functions, agree that one partner should serve as manager, or employ a manager.
Characteristics ofPartnerships When a partner leaves or dies, the partnership is dissolved. There are four basic types of partners: ordinary partners (active or general partners); sleeping (dormant) partners; limited liability partners and unlimited liability partners. There must be at least one ordinary partner in limited partnerships. Limited partners do not take part in management.
Legal Aspects ofPartnerships Partners have a partnership deed which is normally written up by a lawyer. The business should be registered with the Companies Office of Jamaica.
Advantages of a Partnership More capital can be raised than in the sole- trader type business. Partnerships are fairly easily formed and start-up costs are low. The business benefits from the varied ideas and abilities of partners. Specialization among managers increases output.
Advantages of a Partnership The partnership is a more efficient and more controlled business than the sole trader. The workload can be shared. This allows partners to be able to take holidays. There is limited government interference. Partners maintain close contact with employees and customers.
Disadvantages ofPartnerships There is unlimited liability for ordinary partners and for unlimited partnerships. There can also be a lack of continuity. Disagreements often occur among partners.
Disadvantages ofPartnerships All partners will lose if one partner makes a bad decision. Capital is still limited since there can only be a maximum of 20 partners. There is a difficulty in finding suitable partners.