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PARTNERSHIP (A Partnership agreement (In order to establish a partnership,…
PARTNERSHIP
A Partnership agreement
In order to establish a partnership, there has to be a partnership agreement. This agreement defines the terms and conditions agreed upon by the partners and the may be entered into:
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Formation procedure
Advantage
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A Partnership agreement may be entered into in writing but it is not a requirement according to the law.
Disadvantage
If there is no partnership agreement in writing, it may complicate issues if there is a disagreement and the matter needs to be settled in the court of law.
A predetermined ratio
This percentage (which is used to calculate assessed values based upon the market value of property) is known as the “predetermined ratio.” ... For example, if a commercial or industrial property has a market value of $2.5 million, in a county with a 25% predetermined ratio, its assessed value should be $625,000.
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Continuity of existence
Disadvantage
The business has no continuity of existence. If one partner dies, retires or if the new partner joins, a new partnership agreement has to be signed and this means (on paper at least) it is a new business
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Capital requirements
Advantage
It is possible to raise more capital through a partnership as there are more people who can contribute to the business
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They will usually share capital contributions, profits and losses using a predetermined ratio
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