Advantages of a partnership include that:
1.two heads (or more) are better than one
2.your business is easy to establish and start-up costs are low
3.more capital is available for the business
4.you’ll have greater borrowing capacity
5.high-calibre employees can be made partners
6.there is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
7.partners’ business affairs are private
8.there is limited external regulation
9.it’s easy to change your legal structure later if circumstances change.
Disadvantages of a partnership include that:
1.the liability of the partners for the debts of the business is unlimited
2.each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts
3.there is a risk of disagreements and friction among partners and management
4.each partner is an agent of the partnership and is liable for actions by other partners
5.if partners join or leave, you will probably have to value all the partnership assets and this can be costly.
Partnership Deed
Before starting a partnership business, all the partners have to draw up a legal document called a Partnership Deed of Agreement. It usually contains the following information:
There are many parts that should be included in any articles of partnership. These are:
Names of included parties - includes all names of people participating in this contract
Commencement of partnership- includes when the partnership should begin. The date of the contract is assumed as this date, if none is given.
Duration of partnership - includes how long the partnership should last. It is automatically assumed that the death of one of the contracting parties breaks the contract, unless otherwise stated.
Business to be done - includes exactly what will be done in this partnership. This section should be very particular to avoid confusion and loopholes.
Name of firm - includes the name of the business entity.
Initial investments - includes how much each partner will invest immediately or by installments.
Division of profits and losses - includes what percentages of profits and losses each partner will receive. If it is not a limited partnership, then there is unlimited liability (each partner is responsible for all partners' debts, including their own).
Ending of the business - includes what happens when the business winds down. Usually this includes three parts: 1) All assets are turned into cash and divided among the members in a certain proportion; 2) one partner may purchase the others' shares at their value; 3) all property is divided among the members in their proper proportions.
Date of writing - includes simply the date that the contract was written.
1.two heads (or more) are better than one
2.your business is easy to establish and start-up costs are low
3.more capital is available for the business
4.you’ll have greater borrowing capacity
5.high-calibre employees can be made partners
6.there is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
7.partners’ business affairs are private
8.there is limited external regulation
9.it’s easy to change your legal structure later if circumstances change.
Disadvantages of a partnership include that:
1.the liability of the partners for the debts of the business is unlimited
2.each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts
3.there is a risk of disagreements and friction among partners and management
4.each partner is an agent of the partnership and is liable for actions by other partners
5.if partners join or leave, you will probably have to value all the partnership assets and this can be costly.
Partnership Deed
Before starting a partnership business, all the partners have to draw up a legal document called a Partnership Deed of Agreement. It usually contains the following information:
There are many parts that should be included in any articles of partnership. These are:
Names of included parties - includes all names of people participating in this contract
Commencement of partnership- includes when the partnership should begin. The date of the contract is assumed as this date, if none is given.
Duration of partnership - includes how long the partnership should last. It is automatically assumed that the death of one of the contracting parties breaks the contract, unless otherwise stated.
Business to be done - includes exactly what will be done in this partnership. This section should be very particular to avoid confusion and loopholes.
Name of firm - includes the name of the business entity.
Initial investments - includes how much each partner will invest immediately or by installments.
Division of profits and losses - includes what percentages of profits and losses each partner will receive. If it is not a limited partnership, then there is unlimited liability (each partner is responsible for all partners' debts, including their own).
Ending of the business - includes what happens when the business winds down. Usually this includes three parts: 1) All assets are turned into cash and divided among the members in a certain proportion; 2) one partner may purchase the others' shares at their value; 3) all property is divided among the members in their proper proportions.
Date of writing - includes simply the date that the contract was written.
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