Partnerships- One Of The Many Forms Of Business Structures
Author: Peter Gitundu
Author: Peter GitunduPartnerships are one of the many forms of business structures available. They are formed by two or more persons with the sole aim of maximizing profits and helping each other through the decision making process. The main reason behind forming partnerships is to be able to pull resources together for the common good of the business.
Since the partners are not employed by the business but are purely managers, they are provided with form W-2, which help them file for tax returns and other requirements as required by the law that governs business structures. The partnership as a whole must file for returns on an annual basis. This includes information on income, deductions, gains, losses and other transactions.
Partnerships do not pay income tax, but they pass on their profits and losses to the partners. This is one advantage of partnerships as compared to sole proprietorship; the fact that losses are not taken care of by a single individual. Another advantage is that during decision making, there is room for consultation, meaning that the decision arrived at is based on varied opinion.
Partners are entitled to differentiated roles, depending on the type of partnership that they have accrued. For example, a quasi partner is not involved in decision making and a limited partner is not a signatory to the business bank account. The roles are defined depending on what one is bringing in to the enterprise. One who allows his name to be used as the business name but does not get involved in the running of the enterprise is known as a silent partner.About the Author:
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