Answer to Question #208202 in Management for Cessy

Question

Define partnership 2) List 4 advantages and 4 disadvantages of partnerships 3) outline the difference between limited and general partnerships.

Answer 1

Advantages

a) A partnership is more flexible and high potential of growth facilitated by members contribution.

b)It is more easier to form and manage because it is not strictly regulated.

c)In a partnership there is sharing of responsibilities which makes it easier to manage activities.

d)Members share ideas to come up with a better decision.

Disadvantages.

a) Partners have different views and ideas which results to disagreements

b)There is sharing of liability and financial risks among all the members.

c)Profits are always shared among all the members of the partnership without considering their contribution.

d) The partnership is subjected to taxation same as the sole traders.

A general partnership is a relationship where the members contribute to day to day management of the business operation while a limited partnership is a relationship where one or more partners are not involved in the day to day business management.