Partnerships

Question 1

What is a partnership

Answer 1

A business owned by 2-20 people

Question 2

Key features of a partnership

Answer 2

-owned by the 2-20 people
-controlled (decision making) by the 2-20 partners
-financed by the investment of each individual partner (may also apply for loans and grants)
-deed of partnership is drawn up to outline the formal relationship of partners and how profits are divided

Question 3

Advantages of being a partnership

Answer 3

-more finance can be raised compared to sole traders
- Workload and responsibility can be shared between partners
- Partners each bring different experience and expertise to the business

Question 4

Disadvantages of being a partnership

Answer 4

• Unlimited liability
  -Profit is split between the partners
  -There could be disagreements/arguments between partners
  -The actions of one partner are legally binding on others