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Following on from last week’s post this week I will be talking about business partnerships. So what defines a partnership? A Partnership is when two or more people combine to form a business unit. The restriction to the number of people used to be 20 partners but now this has been lifted and no definite limitations exist. Each partner has a right to receive a percentage of the dividends depending on the amount they invested initially.
In the same way as sole traders, partners are equally responsible for any debts or negative publicity incurred by the company. Also this applies to debts incurred by any of the partners so watch out when entering into partnerships as the wrong partner can put an end to any aspirations you have. In the extreme event creditors may take your personal possessions to pay off debts belonging to any of your partners.
One of the most important things to consider when considering the format of the business is to draft up a partnership agreement as you may come to regret it if you neglect minor details. Sometimes being described in the same mould as marriages and divorces, although the thought of things going wrong are unimaginable the fine details still need to be put into a legal document to negate any immoral actions in the future.
A study in East Anglia showed over half of all businesses had been founded or acquired in collaborations.
68% of high growth firms had been successful due to partnerships.
A majority of firms had been started or acquired by people who were not related or married.
I will be talking more business with you very soon, so make sure you stay tuned in.