Partnership
Partnerships are also business enterprise but are owned by multiple players. They are governed by The Civil Law of Partnership (country-by-country listing of types of partnerships). As there is more than one owner, it is advisable for the partners to draw up an agreement specifying the rights and responsibilities of all partners. Some of the items to be included are:
a) Equal Financial Contribution by Each Partner
b) Profit Sharing ratio;
c) Salaries to be paid to the partners;
d) Interest on capital contributed;
e) Interest on Loans form partner;
f) Interest on drawings, etc.
If there is no such partnership agreement, or if some point are not covered then the terms of the Civil Law of Partnerships (country-by-country listing of types of partnerships) should be followed.
Most professionals, such accountants and lawyers, operate their business as a partnership. The maximum number of partners in a firm should not exceed twenty.
There are 4 types of partnership : a) Business partnering
b) General Partnership
c) Limited Partnership
d) Limited Liability Partnership (LLP)
Pro’s & Con’s
The Pro’s of the partnership are the partnership itself is not taxed on its profits. The con’s Partners are taxed individually on their share of partnership profits (which comprise their share of profits, interest on the capital and salaries).