Partnerships :: Business and Management Studies

PartnershipsDeed of leagueA written entry that sets out the patronage relationship betweenmembers of a partnership.Limited PartnerA member of a partnership who has unlimited liability. Such partnersinvest money and have a share of the profit, but assume no part inrunning the firm.PartnershipWhere two or more people own a business to conkher with a military position to devisinga profit.Sleeping partnerA member of a partnership who invests money in the firm but plays nopart in its running.What is a partnership?A partnership exists when two or more people own a business togetherwith a view to making a profit.Most partners have unlimited liability, therefore if the businessfails they can lose each(prenominal) their personal wealth.A maximum of 20 partners is allowed in world(a) partnership.Each partner is a part owner in the business and has the right to takepart in running it.Sleeping partners of limited partners may invest in the business buttake no part in its running.Why for m a partnership?To finance expansion of a sole traders business. A sole traders ownresources will be limited. To obtain capital for a businessTo get someone to share the work and responsibility of running abusinessTo add new skills to the business.Deed of PartnershipThis is a very important document and is the contract that sets outthe terms of the relationship between the partners.Benefits of working as partnersMore start up capitalShared costsShared termination makingWider range of skillsMore ideas.Drawbacks of working as partnersUnlimited liabilityHave to share profitsLimited capitalOne partners actions can abuse the businessNo continuity / stabilityHard to get money backActivities1. Unlimited liability is more of a risk to partners than it is to sole traders because if the business fails, the partners could lose all of their personal wealth, not just the money invested in the business, even if the problem was not to do with them. If someone was owed money by the busine ss, the partnership can be sued or just one partner could be sued. If that partners had to remunerate the debt, he or she would have to get the other partner to pay their share of the money owed.2. The reason that there is a legal limit on the number of partners in a partnership is because if there are to legion(predicate) partners it gets out of hand, and it becomes hard to keep track.3. See separate sheet4. We dont believe this statement to be very true at all because, we