Partnership

The best partnerships aren’t dependent on a mere common goal but on a shared path of equality, desire, and no small amount of passion. – Sarah MacLean

 WHAT IS A PARTNERSHIP

A partnership is a business in which two or more individuals share the responsibilities of ownership.
Every partner of the business is responsible for contributing towards the debts, liabilities, money matters, skills, properties or labor requirements. Also, all the partners also share the losses and profits
incurred by the business during the course of operations.
A legal partnership agreement is critical for a partnership, as it needs to showcase company policies and decisions regarding all future issues related to making business decisions, the division of profits amongst partners, resolution of disputes, changes in the ownership, dissolving of partnerships and planned processes for decision making.
There are three common types of partnerships,
 
Limited Partnerships-These are complex and allow the partners to enjoy limited liability along with limited input and contribution in management decisions. The imposed limits depend on the
investment percentage of each partner. Short term company projects ideally choose a limited partnership entity structure.
Joint Ventures– These are a form of general partnerships, which are set up for a limited time period. They may even be set up for a single project. The partners who are part of a joint
venture can be accepted as an ongoing partnership if they decide to continue the venture, but it is important that they must file their intent on a legal document.
General Partnerships– In this type of partnership, the losses, profits and the liabilities with management duties are distributed equally amongst all the partners. If unequal distribution is decided, then each partner’s assigned percentage must be recorded in the partnership agreement document.

WHAT ARE THE BENEFITS OF A PARTNERSHIP

The advantages and benefits of choosing a Partnership for your business are:

  • This is an easy business structure to form and is generally an inexpensive option.
  • Each partner of the partnership is equally committed to the success of the venture.
  • In a partnership, there is the advantage of every partner pooling in their resources in order to raise capital for business. This way, a business can double their seed money or even secure credit if needed.
  • In a good partnership, the business is able to reap full benefits of the expertise, skill, business acumen, resources and strengths of each partner, to ensure complete competitive advantage to the business.
  • If businesses offer partnership incentives to employees, they attract highly qualified and motivated set of employees who prove to be an asset to the company.
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