FORM OF BUSINESS ORGANIZATION: PARTNESHIP BUSINESS-MEANING, SOURCES OF CAPITAL, FEATURES, ADVANTAGES AND DISADVANTAGES, PARTNERSHIP DEED, DISSOLUTION, TYPES OF PARTNERSHIP- BY INSRUCTOR EUNICE OKOYE.
MEANING OF PARTNESHIP BUSINESS: It is when two or more people come together to form business for the purpose of making profit. It requires a minimum number of two persons and maximum number of twenty persons. In banking services, the minimum is two persons while the maximum is ten persons.
SOURCES OF CAPITAL OF A PARTNERSHIP: The sources of capital are as follow:
Capital can be from partners’ contribution.
It can be from admission of new members.
Capital can be secured by investing profit back to the business.
A partnership business can get loan from commercial bank.
FEATURES OF A PARTNESHIP BUSINESS: A partnership business has the following features.
It is owned by two to twenty persons [ or two to ten persons in case of a blanking business].
The partners have unlimited liabilities.
Their purpose is to make profit.
It has a legal backing.
The profit and loss are shared by partners based on their agreement.
ADVANTAGES OF A PARTNERSHIP BUSINESS: It has the following advantages.
It has more capital than a sole proprietor.
The talent of individual partner can be developed.
The business account is not made known to the public.
They take better decision.
Their business clan be developed due to more capital.
DISADVANTAGES OF A PARTNESHIP BUSINESS:
It takes time to take decision since the partners are many.
The liability of the partner is unlimited.
Any form of disagreement among members may bring an end to the business.
The death of an active partner may make the business to come to an end.
PARTNERSHIP DEED: This is a written agreement among the partners. The deed contains the name of the business, the names of the partners, the nature of the business to be transacted, the amount of capital required and how to share the profit and loss of the business.
PARTNESHIP DISSOLUTION: Dissolution of partnership is a way of putting the life of an existing partnership business to an end. A partnership business can be dissolved under the following conditions:
If the time fixed in the partnership agreement comes tom an end.
The partners can come together and decide that the business should be dissolved.
The death or bankruptcy of the general partners may lead to the dissolution of the business.
Dissolution can occur when partnership business can no longer perform its duties as a partnership business.
TYPES OF PARTNERS: The following are the types of partners.
ACTIVE PARTNER: An active partner takes active part in the running and control of the business.
PASSIVE PARTNER: A passive partner does not take part in the running and management of the business.
GENERAL PARTNERS: This is a partner with unlimited liability in the partnership business. He is managing partner.
LIMITED PARTNER: A limited partner has limited liability in partnership business.
SLEEPING/DORMANT PARTNER: This partner only contributes part of the capital used in the formation and running of the business but does not take part in the administration of the business.