Outline six characteristics of a partnership form of business. (6 marks)June/July 2020

A partnership is a form of business in which two or more individuals, called partners, come together to operate a business and share the profits. There are several characteristics of partnerships:

1. Shared ownership: Partnerships involve shared ownership among the partners, who are responsible for managing and operating the business.
2. Shared profits and losses: Partners in a partnership share the profits and losses of the business equally or in proportions agreed upon by the partners.
3. Unlimited liability: Partners in a partnership have unlimited liability, which means they are personally responsible for the debts and obligations of the business. This means that their personal assets, such as their homes and savings, can be seized to pay off business debts.
4. Decision-making authority: Partners in a partnership have equal decision-making authority, unless otherwise stated in the partnership agreement.
5. Fiduciary duties: Partners owe fiduciary duties to each other, which means they have a legal obligation to act in the best interests of the partnership and to not take advantage of their position for personal gain.
6. Termination: Partnerships can be terminated by the mutual agreement of the partners or by the death, incapacity, or bankruptcy of a partner.