State the term - partnership, Accounting Basics

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State the term - Partnership

A partnership exists where at least two individuals carry on a business together with intention of making a profit. Partnerships have much in common with sole-proprietor businesses. They are generally quite small in size (Though some, like partnerships of accountants and solicitors, can be large). Partnerships are also easy to set up as no formal procedures are needed (and it's not even essential to have a written agreement between partners). Partners can agree whatever arrangements suit them concerning the financial and management aspects of business. In the same way, partnership can be restructured or dissolved by agreement between the partners.

Partnerships aren't recognised in law as separate entities and so contracts with third parties should be entered into in name of individual partners. Partners of a business generally have unlimited liability.

 


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