Each partner brings certain personal skills and assets into a partnership. One p

Question

Each partner brings certain personal skills and assets into a partnership. One partner could have the technical knowledge while the other partner has the business knowledge. This partnership agreement would easily be 50/50. However, when there are multiple partners and one brings in time, one talent, and the other physical assets, the partnership agreement becomes complicated.
As a group decide on a partnership business. Determine what the partnership business will provide, how the partnership will allocate income and loss, and any salary arrangements. Decide when and how the partnership is dissolved should it become necessary.

Explanation / Answer

A partnership is similar to proprietorship except that there are two or more owners (partners). In a general partnership, all the partners share in gain or losses, and all have unlimited liability for all partnership debts, not just some particular share. The way partnership gains or losses are divided is descreibed in the partnership agreement. This agreement can be informal oral agreement, such as "let's start a lawn mowing business" or a lengthy formal written document. The partnership agreement sets forth the terms and conditions and rules regarding the governance of the partnership. The agreement also describes the kinds of contributions each partner will make and set forth whether it will be an equal partnership or or if one partner will make a larger contribution of money or labor than the other partner. This agreement provides for partner flexibility upon the withdrawl, death or incapacity of a partner and allows for the remaining partners to either accept such partner's successor in interest as a partner or buy out such partner's interest as may be agreed by the partners. This provision prevents the dissolution of the partnership outright upon such event ad gives the partners flexibility in dealing such unforseen events. Dissolution of partnership indicates that ending up of the agreement starting with a new agreement. Only the agreement is dissolves no physical disposal takes place. The partners will continue to run the business with a new agreement Limited effect on employess, debtors and creditors of the business Many disscolution of agreement can take place during the life of a partnership Admission, retirement or death of a partner can result in compulsory dissolution of existing agreement.

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