Partnership Or Business Partners
Partnership Or Business Partners
Wednesday, June 17, 2020
PARTNERSHIP
INTRODUCTION When to or more than two persons doing business combine with the purpose to get profit, it is called partnership. It is business ownership, which must require at least two partners. The maximum numbers of partners is 20 but in the case of banking it are only 10 to run a partnership an agreement between the partners is essentials which is called partnership agreement. After sole proprietorship it is most common form of business ownership in the business world.
DEFINITION
“Partnership is an association of two or more persons to carry on as co-owners a business for profit which needs an agreement”.
ADVANTAGES
DEFINITION
“Partnership is an association of two or more persons to carry on as co-owners a business for profit which needs an agreement”.
ADVANTAGES
1. Tax saving The greatest advantage of partnership is tax saving. Since the profit is divided among partners the taxable income is reduced resultant in low income tax Moreover, Income of the partnership is not taxable and it’s become taxable when it is divided among the partners. So the tax is imposing only on the income of partners.
2. Combined Judgment and Skills It is common belief that two heads are better than one, and it is true especially in partnership where partners have different skills, experiences, abilities, and qualifications. These different and diversified qualities proved to be a windfall for the partnership business.
3. Larger Capital In partnership capital of the business may be greater than the sole proprietorship. Increasing the number of partners can increase capital any time.
4. High Credit Standing Partnership enjoys the highest credit standing of all three types of business ownership because if the assets of the business are insufficient to pay off debits, the personal property of partners can utilize. And this is the matter of satisfaction for creditors.
5. Retention of Valuable Employees Partnership has more than one co- owner. If it has a key and valuable employee, and if there is a risk or likelihood that he made leave the job, He may be offered to join the firm as a co-owner. In this way important employees can be retained.
6. Personal Interest The business and its success or survival depends upon the personal interest of owner. In partnership partners are very enthusiastically involve in running their business and therefore business gets prosperous from their personal interest and efforts.
7. Definite legal Status Partnership is one of the oldest forms of business ownership and therefore, it has clear-cut answers about the legal acts, Rights, duties, liabilities of partners. Therefore partnership problems can be clearly and definitely solved in the light of law.
DISADVANTAGES
1. Lack of continuity Partnership lacks in continuity. It has a limited life. It comes to an end in the following situations some of which are common. * Death of partner * Admission of partner * Retirement of a partner * Insanity * When the partner is convicted for moral offence * Bankruptcy of a partner
2. Unlimited liability This is a serious disadvantage of partnership. According to which if the assets of the business are insufficient to pay off debts, the personal property of partners can utilize to discharge of business debts.
3. Divided Control and Management
2. Combined Judgment and Skills It is common belief that two heads are better than one, and it is true especially in partnership where partners have different skills, experiences, abilities, and qualifications. These different and diversified qualities proved to be a windfall for the partnership business.
3. Larger Capital In partnership capital of the business may be greater than the sole proprietorship. Increasing the number of partners can increase capital any time.
4. High Credit Standing Partnership enjoys the highest credit standing of all three types of business ownership because if the assets of the business are insufficient to pay off debits, the personal property of partners can utilize. And this is the matter of satisfaction for creditors.
5. Retention of Valuable Employees Partnership has more than one co- owner. If it has a key and valuable employee, and if there is a risk or likelihood that he made leave the job, He may be offered to join the firm as a co-owner. In this way important employees can be retained.
6. Personal Interest The business and its success or survival depends upon the personal interest of owner. In partnership partners are very enthusiastically involve in running their business and therefore business gets prosperous from their personal interest and efforts.
7. Definite legal Status Partnership is one of the oldest forms of business ownership and therefore, it has clear-cut answers about the legal acts, Rights, duties, liabilities of partners. Therefore partnership problems can be clearly and definitely solved in the light of law.
DISADVANTAGES
1. Lack of continuity Partnership lacks in continuity. It has a limited life. It comes to an end in the following situations some of which are common. * Death of partner * Admission of partner * Retirement of a partner * Insanity * When the partner is convicted for moral offence * Bankruptcy of a partner
2. Unlimited liability This is a serious disadvantage of partnership. According to which if the assets of the business are insufficient to pay off debts, the personal property of partners can utilize to discharge of business debts.
3. Divided Control and Management
Management and control is divided among the various partners, which create many administrative problems. Divided control causes delayed decisions. Duties and responsibilities are difficult to fix. Accountability is weak.
4. Lack of Transferability (Frozen Investment)Partnership has a frozen investment. Whatever once invested in the business cannot be with draw by the partners. If a partnership will stand dissolved. In company, the shares can be transferred without affecting the existence of the company.
4. Lack of Transferability (Frozen Investment)Partnership has a frozen investment. Whatever once invested in the business cannot be with draw by the partners. If a partnership will stand dissolved. In company, the shares can be transferred without affecting the existence of the company.
5. Disagreement among the partners The greater the numbers of the partners, the higher are the chances of disagreement among them. The partnership business is a loss from the possibility of the disagreement among the partners.
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