Understanding Business Partnerships

What is a partnership in business?

• A business owned by a single individual

• A business where there are two or more owners

• A business owned by the government

• A business that does not aim to make a profit

What is a Deed of Partnership?

• A document that lists all employees of the partnership

• A document that registers the partnership with the government

• A document that contains rules and agreements between partners

• A document that outlines the partnership's business goals

Which of the following is an advantage of forming a partnership?

• No need to share profits

• All profits go to one person

• Increased credibility with potential customers

• Complete control over business decisions

What is a disadvantage of forming a partnership?

• Spreads the risk across more people

• Increased workload for each partner

• Disputes over workload

• Easier to raise capital

How are profits typically divided in a partnership?

• According to the amount of capital each partner provides

• According to the age of each partner

• Based on the number of hours worked

• Equally among all partners

What is one reason a partnership might not become a private limited company?

• It is cheaper to set up a limited company

• Limited companies have more privacy

• Partnerships do not need to file public accounts

• Limited companies have fewer legal requirements

What is one benefit of a partner bringing new skills to a partnership?

• It reduces the need for marketing

• It eliminates the need for a business plan

• It complements the work already done by the original partner

• It guarantees increased profits

What is a common number of partners in a partnership?

• Between one and five

• Between two and twenty

• Between twenty and fifty

• More than fifty

What is one reason a sole trader might become a partnership?

• To share the risk with more people

• To reduce the number of customers

• To have less control over the business

• To avoid paying taxes

What is a potential problem if partners disagree?

• The business will automatically dissolve

• The partnership will become a limited company

• There may be disputes over the direction of the business

• The partners will have to hire more employees