2. …are when two or more people create a business
without forming a company, similar to a sole
trader, the individuals have unlimited liability for
the businesses debts. It is important for a
partnership that they all trust each other because
they are all responsible for all debts. Partnerships
are usually found in medicine and law. The
Partnership Act 1890 can oversee issues like
distribution of profits if the partnership doesn’t
have the formal document.
Partnerships
3. Disadvantages
Sharing profit - The financial benefits (profits) that results
from the business have to be equally shared which can lead to
arguments and disagreements.
Loss of Control - The decision making has to be shared
between the partnership and nothing can be forced onto the
business.
Unlimited Liability - It can be worrying to have to take
responsibility for mistakes for not only yourself (sole trader)
but the rest of the partnership also.
Disagreements - a partnership is long term and over time as
decisions are shared, situations could possible change and it
could lead to major disagreements.
4. Additional skills - The new partner could possess skills and
abilities that a sole trader doesn’t have which could help to
build the business, improving the existing services or products.
More Capital - More people involved with the business means
more financial support, also the more skills helps them to grow
quicker.
Flexibility - a partnership is quite easy to establish, manage
and run. They have a say in the business making sure that the
partners agree and overall the management is flexible.
Cost effective - each individual partner will specialize in a
particular are and so the prices will be acceptable.
Advantages
