Business

Partnership

When two or more people get together to form a business, this business is known as a partnership. They share cost and/or other resources toward the operation of a venture. Partners pay personal income tax on their share of the profits, but the business itself is not subject to income tax. Nothing separates the partners' personal finances from those of the business.

There are two forms of partnership:

GENERAL - in which all partners share in the management of the business in agreed portions, and in the liabilities and profits.

LIMITED - partners who invest a specific amount of money and are liable for debts up to that amount. Usually they are not involved in the day-to day operation of the company.


ADVANTAGES:

Partners usually invest cash in a business and that means that there's more capital on hand.

Banks or suppliers will be more prepared to extend credit because more than one person is assuming responsibility for the debt.

Partners can bring complementary talents to a business (for example one has excellent ideas and other is a very good salesperson).

Partners share the liabilities of a business.

Possible tax advantages.


DISADVANTAGES:

Possible difficulty in finding a suitable partner - one who supports your personality and skills.

Different perspectives may result in disagreements and the partnership may become hard to manage.

Each general partner has a say in the way the business is run.

Partners share profits, too.

General partners may have to sell their personal assets to meet debts.

There's nothing to stop partners from taking your idea and going into business for themselves.

If you want to sell, you must have the approval of the other partners or they must buy you out themselves. It can be long process and painful.

Partnership dissolve if any partner doesn't live up to the partnership agreement (illness, insolvency, death, incompetence etc.). Insurance can cover some of these eventualities and allow the business to keep running.


Related Links:

Sole Proprietorship

Incorporation

Using Professionals

The Lawyer

The Accountant

Other Professionals

Market Research

Your Products or Service

Your Customers


The Power of Appreciation

Team work is the best tool for any business. Show some appreciation to your workers. Employee appreciation and personal thanks, whether in a small business or large corporation works magic. Every employee wants acknowledgment and personal appreciation, which is also the best way to keep them more productive, engaged, loyal and eager to contribute. Employee recognition is a powerful tool to create culture of engagement, so don't forget to offer personal thanks to your older team members. For people new in the business, experienced and older team members can provide support and guide every step of the way, if they are motivated.



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Did You Know?

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