A partnership (or unincorporated joint venture) is the relationship existing between two or more persons who join together to carry out a trade, a business or a profession.   A partnership is also not a separate legal person or taxpayer. Each partner is taxed on his or her share of the partnership profits. Each person may contribute money, property, labour or skills, and each expects to share in the profits and losses of the partnership. It’s similar to a sole proprietorship except that a group of owners replaces the sole proprietor.   As is the case for a sole proprietorship, a partnership has advantages and disadvantages. There are three different types of partnerships:

  • General/ordinary partnership: partners are liable jointly for the debts or profits of a partnership;
  • Anonymous (sleeping) partnerships: the anonymous partner is not known to the public and is liable to the partners for pro rata share;
  • Commanditarian Partnership: the partner is purely a financial participant with a restricted liability-similar to a shareholder in a company. He shares in the profits and losses, but their liability is restricted to their specific contribution or to an agreed amount.
Some advantages​​Some disadvantages
​Easy to establish and operate. There are no statutory audit requirements​Unlimited liability of the partners
Greater financial strengthEach partner may be held liable for all the debts of the business. Therefore, one partner who is not exercising sound judgment could cause the loss of the assets of the partnership as well as the personal assets of all the partners. If the partnership’s estate is sequestrated, the estates of the partners can follow unless the partners undertake to pay the debts of the partnership
Combines the different skills of the partners​Authority for decision-making is shared and differences of opinion could slow the process down
​Each partner has a personal interest in the business​Not a legal entity
​Lesser degree of business continuity as the partnership technically dissolves every time a partner joins or leaves the partnership

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