Partnerships

Partnerships

Ownership of business shared between partners

Partnerships have between two and twenty members. Ownership of the business is shared between all partners.

Deed of Partnership

The rules of the partnership described in the Deed of Partnership.  

This is a document containing an agreement that details the rights and obligations of each partner. 

Examples of what’s included in The Deed of Partnership.

• Voting rights of each partner.
• What happens if a partner retires in the partnership.
• The Amount of capital each partner should provide to become a partner.
• How profits or losses will be shared between partners.
• What happens if a partner dies in the partnership.
• How the partnership can be terminated.
• What happens if a partner leaves the partnership.

Advantages of a partnership

1. A partner can cover in times of difficult such as injury or illness
2. Less risk for business owners – Risk is spread amongst partners
3. Money required to start up can be from more than one partner 
4. A variety of skills and experience is available by having different partners 
5. Support available from partners when needed

Disadvantages of a partnership

1. There is a risk of disagreements and friction among partners
2. All partners are liable for each other’s mistakes
3. One person can’t control the direct action of the firm
4. Profits are shared between partners
5. It can be difficult to make decisions