COMMERCE 101

PARTNERSHIP

Hello Peepz, Hows Life? HOW ARE YOU???. Be more positive and more thankful because they are alot of people all over the world that would die to have what you have or kill to be you- so you are a STAR to someone somewhere JUST D WAY U ARE. Yes YOU!!!!. It Is Well with You in Jesus Name-Amen. Okay, Let's get straight to work!!!!.

Partnership is a relationship that exists when two or more persons contribute skills or money in order to establish, own and manage business activities, with the aim of making profit. Partnership is formed by two to twenty persons but in banking the maximum number of partners is 10.

Characteristics of Partnership:

# The Partners are Liable for the Total of the Business without Limits. The Partners will lose their investment as well as private properties in event of liquidity.

# In Partnership Business, no special formalities are necessary but written agreement may be needed.

# Partnership is owned by two to twenty persons or two to ten persons in banking sector.

# Every Partner is an agent of the business and every act of a Partner done in carrying out of

the business is binding on them.

# Each Partner is entitled to participate in the management except where specially agreed.

FORMATION OF PARTNERSHIP

For Partnership Organisation to function effectively and efficiently, there must be rules and regulations that will be guiding the business unit. These Rules and Regulations guiding the Partners is known as PARTNERSHIP DEED/ DEED OF PARTNERSHIP.

The Agreement contains the following rules and regulations:

* Names of Partners.

* Names and Nature of Business.

* Amount of Capital to be Contributed by Partners.

* Requirement for Admission into the Business.

* Rights and Duties of each Partner.

* Sharing of Profits and Losses.

* The Life Span or Duration of the Business.

* Circumstances which shall dissolve the Partnership.

* Payment of Partners Salaries.

* Other Benefits to the Partners (Drawings).

Types of Partnership:

1. LIMITED PARTNERSHIP- Under this type of partnership, Partners cannot take equal parts in management and the running of the business. There must be one general partner with unlimited liability and one limited partner whose liability is limited to the amount invested.

2. ORDINARY/GENERAL PARTNERSHIP- Here, Partners have equal responsibility and risk in the business. They are liable to the full event of the debt of the firm. All of them must take active in the day running of the business.

KINDS OF PARTNERS

There are various kinds of Partners and they include:

1. LIMITED PARTNER- This is the one who has agreed to contribute a certain sum of money in the business and prevented by law not to take active part in the day to day management and administration of the partnership business. He is liable for debt and obligations of the partnership only up to the capital contributed.

2. GENERAL PARTNER- This is the one who has full power of participating in the conduct and management of the partnership business or he is the one who agrees to be responsible for the success/failure of the partnership business. He participates in the day to day management and administration of the partnership business.

3. ACTIVE PARTNER- This is the one who contributes to the financing and the formation of the business. He takes active roles in the day to day running of the business and is been paid a certain sum of money called SALARY.

4. NOMINAL/PASSIVE PARTNER- This Partner contributes nothing but his name in the formation of the business. This type of partners are men or women that is well known in the society. This people because they allow their name to be used in the formation of the business took place in the sharing of profit and liabilities of the business as specified in partnership deed.

5. SLEEPING/DOMINANT PARTNER- This partner only contribute part of the capital used in the formation of the business but does not take part in the management and organisation of the business. He takes part in the sharing of profit and liabilities as specified in the partnership deed.

DISSOLUTION OF PARTNERSHIP

A Partnership may be dissolved as a result of the following reasons.

a. Expiration of the agreed fixed period of time.

b. By Court order increase of any misconduct.

c. When they cannot meet up to their obligations.

d. Retirement of Partners.

e. Determination of the business project that lead to the formation of the partnership.

f. The death of the partner especially on active partner.

g. Joint Decision.

Advantages of Partnership:

a. Partnership have more Financial Resources because more people are involved.

b. There is society in Business operation since the Company is not required by law to submit their annual account to the register of the company.

c. By combining skills and abilities, Partnership Business are managed better than one man business.

d. There is continuity in the business, since the death of the Partner may not lead to the end of the Business.

e. The Partner can spread or share risk and Liabilities among themselves and this will reduce to individual burden.

Disadvantages of Partnership:

a. Death, Insanity and the Bankrupting of a Partner will bring the business to an end.

b. The growth of the Partnership will be limited to the managerial activities of the partner.

c. There is the possibility that a minor disagreement can put the business to an end.

This brings us to the end of today's session. Hope this was very helpful to you, leave a comment of what you think of this tutorial and of your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.