What is a Partnership Organization
Definition
Partnership Organization is defined as an association of two or more persons to carry on as co-owners of a business for profit. The success of partnership depends upon mutual confidence understanding, co-operation & adjustment of the members to accommodate & appreciate each other’s view. Each of the artiness should realize that it is his business & he should work hard to earn greater & greater profit. Every partner is liable & responsible for the acts of other partners in that business. To avoid any Complication at a later stage the constitution of company may be written in an agreement form.
Advantages of Partnership Organizations:
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Due to large number of owner the amount of capital that can be collected is more than that in the case of sole trade organization.
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In this type of organization persons possessing different abilities & skills are chosen & brought together. Therefore the managerial ability of the firm as a whole would be much greater than in case of a sole trader.
Disadvantages:
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Due to unlimited liability risk involved is more.
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After the death or retirement of any one partner the partnership organization may come to an end.
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Sometimes due to some misunderstanding friction may arise the partners which effect adversely in the efficiency & expansion of business.
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All the pertness are jointly and severally liable for the acts of the partner. Thus some times mistakes of one partner may cause a big loss to all the partners
Types of Business Partners:
Members of this type of organization may be associated in different ways. These members can be classified in the following ways.
General partners:
All the partners who participate actively n the business, sharing all the responsibilities, including unlimited liability.
Active partners:
These are these partners who take active part in the management & help in the formulation of policies. These are also known as working or managing partners.
Silent partners:
partners, who just invest money & do not take any part in the management even though he may be known to the public as a partner.
Nominal partners:
Partners who do not invert money & do not take part in the management, but they lend their reputed name for the company’s reputation are known as nominal partners.
Secret partners:
These partners take part in the management secretly but no where their names appear.
Minor partners:
A person who has attained the age of 18 years & associated with the business is known as minor partner. Such partner can be allowed only with the consent of other members. His liability is limited to the investment only.
