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Advantages And Disadvantages Of Partnership

Decent Essays
Partnership
A partnership is an unincorporated business owned by two or more persons associated as partners (Hemanson etl,2011). These people upon either a written or verbal agreement, could take responsibility if anything happens within their partnership. Many retail establishments are partnerships. For instance, dentists, physicians, attorneys and accountants often conduct their activities as partnership.(Prenhall.com/Horngren). It takes less time to form a partnership for example one can just ask a friend to partner with him/her in business. Partnerships may operate under different degrees of formality, ranging from informal, verbal understanding to formal agreements filed with the state in which partnership does business (L. Gapenski,2007). Usually partnerships are long term commitments of people doing business together. The people who own a partnership are called Partners. They do not have to be based or work in the
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There are also many disadvantages of Partnerships. In partnerships, sometimes partners disagree and when they disagree it may be a problem for business. For instance, there may be disagreements as one may feel has more control of the business because of his large contribution. That is why there is a need for a deed of partnership before venturing into any business agreements. The other disadvantage is that partnerships have unlimited liability this means each general partner is liable for the debts of the firm no matter who was responsible for causing those debts. Division of profits also means that partners may as well share risks general partners can lose their personal properties and everything else they own if a business goes bankrupt or loses any lawsuit. Partnerships are also difficult to terminate- Once one has committed himself to the partnership, it is not easy to get out of it except through death which leads to automatic termination of the
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