Partnership is a form of business that has succeeded on it way n global markets. This form of business has a lot of goodies in that combine effort are always stronger. However, the tie between the individual partners should goes beyond the business boundaries to clear the self-interest that may protect from an immediate termination. Partnership therefore is a business were more than one separate identities brings together ideas, capital and skill to commence a single business unit. The partnership is always guided by the agreement signed by the respective partners that consist ways on how they should share profit and losses, contribute capital and so on.
If anyone wishes to begin a partnership as in the case of Jim and Ali, full decision on what kind of partnership they need should be the first thing to view. Nevertheless, commencing a partnership is very beneficial to individuals who are highly driven by the will of success.
Many people fear to start a partnership as a result of future disagreement that can lead to loss or being exploited on one side. However, this myth is not as true as it may look because the formation of the partnership is simple to create and dissolve without anyone affected negatively. All that is needed is signing of agreement. Since this is not the main for Jim and Ali let partnership is the best platform that they should lean on. (HYNES & LOEWENSTEIN P 88)
Due to existence of more than one person, there is a larger contribution of capital since as everyone put money in the same pool. Additionally, borrowing of capital is also higher and the business can start at a higher note. There is a higher managerial power where everyone pours there knowledge and technical skills for the business success. The partnership is prone to succeed as a result of what is termed as personal element. Every partner can act as a manager of the business and can supervise the work going on in case it a big business that has employees. At this case the management becomes strong due to combine efforts. Above all the principle of unlimited liability, because it is easy to get a loan due to the instinctive security guaranteed to the creditor. Secondly, the partners will never be reckless to put their property in jeopardy as it is stated.
Some of advantages that may result in partnership include the risks of implied authority that may result from a dishonest partner landing against the law and has to affect the rest of the partners. Moreover differing in opinions and decision can bring conflicts that can lead to termination of the business.
However, there are other circumstances that unfortunately occur and can lead to termination of partnership. These may be in case of death of one partner; the stability of business can be altered with making it end. On the other hand, a partner may just decide with or without reason to get out of the business by showing the intention to leave business, thus making it unstable and therefore it can come to an end. Jim and Ali should therefore be careful to not to fall as the victims of disadvantages but they should rather focus more on maximizing he benefit that comes with it.
HYNES, J. D., & LOEWENSTEIN, M. J. (2016). Agency, partnership, and the LLC in a nutshell.