Definition Of Partnership
A partnership is a kind of business agreement where two individuals come together to conduct business. They have agreed mutually to work together and the profits or the investment is tin their respective ratios. Some partnerships are dependant on an equal partnership basis and some are minor and major. Both the partners have the right to share the profits. |
Mostly in partnerships both the partners have to contribute equally to the business. If one partner gets the investment, then the other partner also has to get an equal investment. Some partners agree to get a smaller investment but they become the working partners in the deal. Some people may agree to be a sleeping partner. A sleeping partner is a kind of person who brings in the investment but does not work together in the company. The sleeping partner gets a percentage of the profits. A working partner may put an equal amount of investment and also will work full time along with the other partners.
When the business runs on a partnership model, the partners have the right to make management decisions and both of them will be equal participants. There can be more than two people in a partnership business. They also pay taxes in equal ratios. The partners consider themselves as the employees of their business and draw a salary.
A partner can also join later into a business by bringing in an investment. If a partner brings in greater investment and also puts in equal amount of work, then they are entitled for greater profits.
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