Question

Briefly discuss the following topics: PARTNERSHIP: FORMATION, OPERATION AND OWNERSHIP CHANGES

Answer 1

Partnership:

Partnership could be formed within the family, or by a group of individuals, or by a small individual group of businesses or among the entrepreneurs whoever have same interests of product in a business. Partnering among themselves explains that they make a deal of agreeing to make a deal or profit out of a product or services that they dedicate to execute. They may align with the same interests taking equal or proportional earnings out of the business.

Formation:

Partnership can be formed by formal procedure as getting registered by the Companies Act, and Memorandum of Association. Each partnership is different from an aspect of sharing the liability of the company and is generalized in three ways as general, limited liability and sleeping partnership. If one comes along with an idea of one product, the other may come along with the finance or strategy to get it into the market, and another partner may raise promotions over the same product, and all these three may agree to become partners in a business. This is how a partnership most probably get's formed.

Operation:

The partners involved in the business have certain duties to serve such as aligning with the no secrets maintained within the business, staying loyal with each other and not bringing personal matters over the business. They must adhere to care for the business or not to become too much reliant one person and then make a secret profit without any discretion to any other parties involved. They also must keep their rights to get profit and right to pay off the obligation in mind while executing a plan in the business.

Ownership Changes:

Ownership is dependent on the profile of each participant in the partnership, one may act as general while other is just a sleeping partner. One may act actively while other may act passive. One may involve in making decisions while one may contribute money and expect returns at the end of quarter. One may dissolve his acts and contribution and one may try to enter into the partnership after someone's dissolution. So, ownership is not solely dependent on the title but the contribution that they'd make plays a significant role too.