Partnership

Now let's look at partnerships: Just like in any other element of society, when more than one person is involved, things become a little more complicated. As you'll see, unlimited liability is an issue with partnerships as well. Read this section and in light of what you learn, think about what advice you would give Jason in the exercise at the end of the section.

Introduction

LEARNING OBJECTIVES

  1. Identify the different types of partnerships, and explain the importance of a partnership agreement.
  2. Describe the advantages and disadvantages of the partnership form of organization.

A partnership (or general partnership) is a business owned jointly by two or more people. About 10 percent of U.S. businesses are partnerships, and though the vast majority are small, some are quite large. For example, the big four public accounting firms are partnerships. Setting up a partnership is more complex than setting up a sole proprietorship, but it's still relatively easy and inexpensive. The cost varies according to size and complexity. It's possible to form a simple partnership without the help of a lawyer or an accountant, though it's usually a good idea to get professional advice. Professionals can help you identify and resolve issues that may later create disputes among partners.

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