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Outline A Partnership As A Type Of Business Organisation & Outline The…
Outline A Partnership As A Type Of Business Organisation & Outline The Advantages & Disadvantages (45 Marks):
Partnership:
This consists of 2, and not more than 20 people carrying on a business with a view of making a profit e.g. an accounting practice with 4 partners.
Advantages:
Few Legal Formalities:
Partners must register the name of the business with the register of business names if it is different from their own. The deals of a partnership outlines how much each partner has invested, and how profits should be distributed.
Confidentiality:
The partners do not have to publish the business' accounts. Thus, stakeholders such as employees cannot use this information against them.
Decision-Making:
As there are up to 20 people / partners, this results in more balanced, creative solutions.
Access To Finance:
A partnership has up to 20 partners investing in the business, which makes it easier to fund expansion when compared to a sole trader.
Disadvantages:
Unlimited Liability:
Should the business go bankrupt the partners are personally liable for all the debts of the business e.g partners may lose their homes to pay off creditors.
Continuity of Existence:
Death, insanity or bankruptcy will result in the business being resolved.
Taxation:
Partners pay tax at the PAYE rates of 20% and 40% as opposed to much lower corporation tax rate of 12.5%
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