A business partnership is one in which two or more individuals set up a business mutually with each individual investing in the setting up of the business. All the partners in a business sign a contract called the deed of partnership. This contains all the details of the partnership and states how much investment has been done by each member and what percent of profit or loss will come in each one’s share.
Business partnerships are quite effective as the total liabilities although unlimited, get distributed among the various partners along with the losses and further investments. In the case of business partnerships, the revenue generation is estimated to be higher because of the higher investments.
The higher investments result from the fact that an individual cannot put up as much money in a business as compared to the combined investments by a number of individuals or investors.
However, there may be a few cons involved in a business partnership. For one, whenever there are a number of people involved in the decision-making process, arguments and disagreements are bound to take place. This sometimes also results in partners parting ways and starting their individual businesses.
On the other hand, there are some significant advantages of partnerships in business as well. In case of the absence of a partner, the other one can look after matters. Also, when different partners work together, the overall result can be far more effective as each one may have a different area of interest and various aspects related to a matter can be considered and well thought out.