Partnerships

A partnership is an unincorporated enterprise owned by two or more individuals. A partnership agreement, oral or written, expresses the rights and obligations of each partner. For example, one partner may have the financial resources to start the business while the other partner may possess the management skills to operate the firm. There are three types of partnerships: general partnerships, limited partnerships, and joint ventures. The most common form is the general partnership, often used by lawyers, doctors, dentists, and chartered accountants.Partnerships, like sole proprietorships, are easy to start up. Registration details vary by province, but usually entail obtaining a license and registering the company name. Partners' interests can be protected by formulation of an "Agreement of Partnership". This agreement specifies all the details of the partnership.

Complementary management skills are a major advantage of partnerships. Consequently partnerships are stronger entity and can attract new employees more easily than proprietorships.

The stronger entity also makes it easier for partnerships to raise additional capital. Lenders are often more willing to advance money to partnerships because all of the partners are subject to unlimited financial liability.

The major disadvantage of partnerships is that partners, like sole proprietors, are legally liable for all debts of the firm. In partnerships, the unlimited liability is both joint and personal. Partners are also legally responsible for actions of other partners. Partnerships are not as easy to dissolve as sole proprietorships.