1.12:
Partnership
A partnership is a form of business where two or more people join together to achieve common goals.
Each partner shares the responsibilities, profits, and losses of the business, indicating a general partnership arrangement.
This business structure also benefits from the diverse expertise of the partners, potentially leading to innovative solutions and strategies.
Meet Rose and Troy, two friends who love fashion. They decide to open a clothing store together.
They agree to be partners, which means they both own and run the store together, sharing profits and losses equally.
They both put their money into renting a store, buying clothes, and setting up the store.
Rose manages clothes and accessories, while Troy talks to customers, posts on social media, and makes strategies for sales promotions.
Rose and Troy work together as a team, using their different skills to make their business successful.
As more customers visit their store and make purchases, they divide the profits among themselves.
They share the risks and the rewards, making their dream of owning a clothing store come true.
1.12 Partnership
In partnerships, the business is managed collectively by the partners, and profits and losses are shared according to the partnership agreement. Such business structures benefit from the diverse skills of each partner, leading to innovative ideas and strategies. Globally, partnerships are favored for their simplicity and flexibility. Various types of partnerships exist, including general partnerships, limited partnerships, and limited liability partnerships, each possessing unique characteristics. Typically, partnerships are pass-through entities for tax purposes, whereby profits are taxed at the individual partners' rates.
The advantages of partnerships include combined resources and expertise, shared financial burdens, and collaborative decision-making. However, disadvantages such as unlimited liability for general partners and potential conflicts must be considered.
A prime example of a successful partnership is the collaboration between Ben Cohen and Jerry Greenfield. They began their venture with a small ice cream shop that, over the years, evolved into one of the world's most popular ice cream brands, renowned for its innovative flavors. Ben Cohen primarily handled the creative side, developing new ice cream flavors, and managed operations to maintain efficient production and high-quality products. Jerry Greenfield took charge of the financial aspects, including budgeting, planning, and ensuring the company's financial stability. Their complementary skills and shared values enabled them to build a business that achieved financial success and positively impacted society.