Partnerships
Business: Cambridge International GCSE (2027 Exams), topic 1.4.2
Partnerships
Partnerships are businesses that are owned by 2 or more partners. Each partner has an equal share of the profits and equal say in the decision making process. Examples of partnerships are doctors’ surgeries, dentists or accountancy firms.
Advantages
- More people means more experience and more ideas. Decisions can also be better as the owners can discuss pros and cons with each other.
- It is easier to raise money because banks are more likely to lend to a partnership than to a sole trader. More investments means increased access to finance for the firm and this supports quick growth.
- Good employees can be made into partners and this means it is easier to retain the best employees.
Disadvantages
- The profits are shared, so if a sole trader decides to go into business with another person, they may end up with a lower profit for themselves.
- Like sole traders, partnerships have unlimited liability.
- Partners may disagree about business decisions and this can be unpleasant, especially if it is a family-based partnership.
- Each partner is liable for the actions of the other partners. This may lead to further friction between partners.
Test yourself on Partnerships
Which type of business finds it easier to retain employees?
Partnerships