A Business Partnership - Essay Example

A business partnership is a commercial establishment in which another commercial organisation has some alliance. The alliance or relationship may be contractual or a long-term exclusive bond wherein both parties do not ally with other parties. Conversely, a partnership may be envisioned as a business organisation in which two or more people operate and manage a business, with both owners being personally and equally liable for the debts or liabilities that the business may incur.
There are several gains and drawbacks that accost business partnerships and this fact must be considered when one is contemplating entering a business partnership.
Advantages and Disadvantages of a Business Partnership
There are several merits that grace business partnerships and thereby rendering them among the most tenable alternative of business ownership and management. In the first case, business partnerships are relatively cheaper and easier to establish. This is because the Partnership Act 1890 (c. 39) allows two or more people to come together to form a business partnership in their own volition. In this case, all that is needed is the will of these consenting parties. The validity of the will is predicated upon: soundness of mind; the attainment of legal age; knowledge of the nature of the business partnership and the business establishment that the parties are to engage in; and conformance to the law (for instance, a business partnership cannot be formed to sell cocaine since UK law proscribes the trafficking and non-medical possession of psychoactive drugs such as cocaine).
Just as Siems (2009, pp- 767-802) points out, partnerships definitely involve multiple ownership and this means that the owners can easily raise more capital. This is because the two or more business partners are able to contribute more funds. Again, it is also true that multiple owners have a higher borrowing capacity. This means that business partnerships have a higher ability to gather credit to serve as a start-up or operational capital compared to other forms of business ownership such as sole-proprietorships.
Again, it is easier for business partnerships to benefit from an array of complementary skills that the multiple proprietors are bringing. The crux of the matter herein is that the two or more owners bring with themselves, a wider pool of knowledge, contacts and skills. These are values that easily propel the organisation into greater stability, faster and more consistent growth and success. Read More