Question

What is a partnership? What are the different types of partnerships? What are the advantages and disadvantages of this form of business organization?

Answer 1

Partnership- An association/ Legal sharing of the authority, ownership, income, losses and the profits by two parties and the allied business business functioning.

Types-

1- General partnership- This is the case wherein partners are jointly liable.

.Greater risk is involved because of the chance of the ill practices by others. Equal workload is shared.

2- Limited partnership- There exists at least one general partner. Loss happens to be limited in the context of the equity investments. Partnership agreement is essential.

3- Joint venture- More number of partners can come together in the light of the short term projects.

If the joint venture turns to be a successful one, it can get transformed into general partnership.

Advantages-

1- Thorough and deeper decisions because of involvement of the two people/ two distinguished heads.

2- More capital can be possible.

3- Better opportunities for borrowing.

4- Initiation/ pioneering is more convenient.

5- Lower external regulation.

6- Altering the legal aspects is easier.

Disadvantages-

1- There may emerge troublesome times if one of the partners leaves.

2- Behaviour/ decisions/ actions of one partner affect the other.

3- There may arise the distrubances/ conflicting situations among the partners that may badly affect the functioning.

4- Unceasing liability towards debts.

5- The extent of ethical facets also differs.