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Get Started in Shares by Glen Arnold

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Partnerships and liability

Partnerships

If a few friends have a great idea for a new business, one option is to form a partnership. Say there are 10 investors each willing to supply some of the money. Perhaps only one would have the time to work full-time in the business. The others would supply funds only, they would be sleeping partners. The profits would be split in proportion to the finance supplied except for the one who takes on a full-time managerial role; he or she would be entitled to an extra income.

Partnerships are a good form of organisation for many businesses and there are millions of successful partnerships ranging from John Lewis down to husband and wife corner shops. However, there are two difficulties with partnerships, which ...

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