Unit - 1 - Introduction to Partnership.ppt
- 1. UNIT – 1 PARTNERSHIP - INTRODUCTION Dr. P. PIRAKATHEESWARI, Associate Professor, Department of B Com – PA, Sri Ramakrishna College of Arts & Science (Autonomous), Coimbatore – 6.
- 2. 1. PARTNERSHIPS To define what is meant by a business partnership. To understand who owns, manages and shares the profits in a business partnership. To investigate a Deed of Partnership.
- 3. PARTNERSHIPS A group of people (often with similar interests) who come together to share the workload and responsibility of running a business. Minimum 2 – Maximum 20 Lawyers Architects Accountants Any Others??
- 4. A shared workload Shared decision making Shared ownership Share profit Shared liability for debts
- 5. Each partner is responsible for the entire debt of the partnership, so if one partner makes a bad decision then it has to be met by all of the partners. UNLIMITED LIABILITY PARTNERSHIPS
- 6. OWNERSHIP & MANAGEMENT Equal Ownership Equal Management Equal Share in Profits Unless stated in the “Deed of Partnership”; Partnerships have
- 7. •Why Partnerships? •The main reason is usually to expand the business by an increase in capital or to gain specialist skills that are required for the business to develop •Who owns a partnership? •The business is owned by the partners equally e.g. if there are 3 partners then they will each own a third of the business, this is the case unless stated otherwise in the deed of partnership. •Who manages the business? •The partners share the control of the business equally unless the partnership agreement states otherwise. In many partnerships each partner may run a separate department. PARTNERSHIPS
- 8. SETTING UP A PARTNERSHIP Deed of Partnership •How profits and losses are to be shared. •How much money each partner has put into the business •How much each partner gets paid – “salary.” •The working arrangements of the partnership e.g. who has responsibility for which part of the business •Arrangements for removing a partner or adding a partner to a business. •Arrangements for ending the partnership and the dividing up the assets once the partnership is dissolved.
- 9. DEED OF PARTNERSHIP •This legal Partnership is between: •The name of the Business will be: •The Business activities are: •Each Partner agrees to provide the sum of: £ •The duties of the partners will be as follows: •The bank account will be in the name(s) of: •Profits will be shared out: •Wages paid will be: •Regular Meetings: •Overall Decisions on business: •Leaving the Partnership: •Signed: x Dated: x
- 10. •Easy to set up. •Business can gain professional help through taking on a qualified partner. •New Partners - New Ideas •Extra partners bring extra capital •Responsibility for running the business (both decision making and workload) is shared •Finances are kept private •Division of labour leads to greater expertise ADVANTAGES OF FORMING A PARTNERSHIP
- 11. •Unlimited liability for the debts of the business •Finance still limited •Lack of continuity •No consultation required (Deeds of Partnership are only recommended) •Decision making more complex DIS ADVANTAGES OF FORMING A PARTNERSHIP