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Various aspects of partnership in business

   Tuesday, 15 April 2014 14:41 PBC Blog

Business partnership is the association of two or more persons combined in a business project in which the profits and losses are shared. In other words we can say that it is an association of two or more individuals to carry on as coworkers to get benefit from the mutual business.

Sometimes in the economics of large scale operation, a sole businessman may fail to cope up with the demands of expansion. He may possess sufficient capital but he may be failed by the lack of experience, technique and managerial expertise. Therefore, a combination of two or more persons, some having capital and others having skill or experience proves to be profitable.

Partnership business is easy to start as it is free from all legal customs. The business can be easily increased or reduced to suit the conditions. Moreover new individual can be introduced into the business who are interested to work in the environment. Thus the business can utilize the abilities of enthusiastic young blood.

The settlements, which take place in the partnership, are correlated settlements i.e. the decisions which are jointly taken by all the partners. Each partner has a right to decide the conditions that are advantageous to the business.

There are many other advantages of partnership in business that are listed below:

1. There are more than one legal owners, it is therefore possible to conjoin the proficiency and experience of every partner to the best interest of the business. With the combined resolution and judgment, business is enormously benefited and more profit is possibly earned.

2. In the sole businesses, the amount of wealth is confined to the personal credit and capital of one individual. In partnership, the capital can easily be raised according to the demands by bringing in additional hands.

3. Since each partner is accountable not only for his own act but also for the acts of his partners, he shall dedicate his intimate concentration and interest to the activities of the firm. This will approve a corporation to attain utmost efficacy.

4. Continuity of partnership guarantees that too much wealth does not get concentrated in few hands.

To make the partnership quite effective and beneficial one must avoid the following conditions in mind:

1.Every technicality and obligation must be clearly defined and written out, and agreed upon by all members. This is best done with a written agreement. Just make sure the attorney is dignified in business circle.

2. In any partnership contract, one must define the terms of an retirement policy that allows the partner to walk away from the partnership, or that provides options to buy out the other group or individual.

3. Every business, including partnerships, needs a supervisor or a boss. Partnership route must be of 60/40 or 70/30 division .Then there will be a point person for accountability and overall functional command.

Hence adding a partner can reduce the workload, financial burdens and prove the overall quality of services and good position.

 

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