Often, partnerships are formed by professional people such as architects, accountants and solicitors. Whilst the minimum number of partners is two, there is no maximum number, so major professional partnerships of solicitors or accountants might have hundreds or even thousands of partners.
The advantages of partnership include the following:
• The problems and pleasures of running the business are shared.
• There is access to greater expertise and financial input.
• Losses as well as profits are shared.
• Few legal formalities are involved, though a partnership agreement should be drawn up to avoid misunderstandings.
• The financial results do not have to be made public (unless it is a limited
Disadvantages include the following:
• Personality clashes may threaten the business and ultimately cause the break-up of the partnership.
• In the vast majority of partnerships, there is no restriction on the personal liability of partners for the debts of the business
• Generally, a partnership has less access to funding for expansion than does a limited company.
The main sources of finance for a partnership are:
• Capital introduced by the partners
• Loans from friends and family of partners
• Bank borrowings, through overdrafts or loans, secured either on the partnership's assets or on the personal assets of individual partners
• Profits ploughed back into the business.
Elmer Tamayo is the author of myaccountinginfo.net who took-up his degree of "BS in Accountancy" major in accounting. A Web designer and blogger, His passion is Reading books, searching new tech update on the world wide web. Read More...
