Partnerships

• Partnerships have between 2 and 20 owners who set up and run a business together
• Partnerships are common in professional service businesses like lawyers, doctors, and accountants
• Owners in a partnership agree on rules outlined in a deed of partnership, specifying profits allocation, ownership percentage, roles, responsibilities, and debt payment percentages
• Partners in a partnership pay income tax on their earnings
• Advantages of a partnership:

  • Quick and easy to set up
  • Shared decision-making and responsibility for debt among owners
  • Partners bring more skills and ideas
  • More capital available to invest
• Disadvantages of a partnership:

  • Involves long work hours
  • Profits have to be shared among partners
  • Conflict among owners can occur
  • Risk of unlimited liability
  • One partner may not uphold their responsibilities in the business