The characteristics of partnership business

      1.IT IS FORMED BY A TEAM

There is a claim that we can make. It is the claim that the definition of an entity could be indicative of its characteristic. For instance, Sole proprietorship is defined as a business that is established by an individual. That is revelatory of the fact that only an individual forges sole-proprietorships. Therefore we need no one to teach us that characteristically sole-proprietorships have only individual forgers, void of multiple formers. Having attested to the claim with the example of sole-proprietorship, we are left with no choice but to accept the claim as fact. 

Partnership is one of those entities that it's definition is indicative of its characteristic. The established definition of partnership, I mean every definition of it ever propounded by men, indicates that it is a business established by a group. 

Judging therefore from it's definition we can conclude that it is characteristically a business established by an individual.

Observation reconciles with this. As we have seen, all partnerships that we have known and heard of were established by individuals. Their formations are void of individual formation. Traditionally partnerships are established by individuals. It is not in harmony with the standard, tradition and nature of partnership, the forging of business by an individual. But rather contrary to it. In other words, any business forged by an individual is no partnership.

The fact that it is termed partnership, implies that it is a business that is forged by communal effort. For literally to partner with people is to indulge them in something.

               2. IT IS OWNED BY A TEAM 

It is a truism that whatever you create, belongs to you. One possess ownership of what he created. And so is it with business. If you create a business, you own it. Business creation requires steps. Every business has its unique requirement and steps for creation. The fulfilment of the steps and requirements usually results in the creation of business. 

Consider bakery to be an instance: If you want to forge a bakery business you would take many steps. You would idealize how the framework of the business would be like. You would generate resource which you would use to buy land, on which you would erect a bakery. You would also buy equipments for baking. You would contract contractors to build a bakery. You are expected to register. When you finally build you would recruit personnel. When you take all those steps, which does not cover all the required step for bakery, you would forge a bakery. And if you succeeded in creating a bakery it belongs to you.

Likewise if you succeed in taking the required steps for forging any business, and eventually forges it, you become the owner of that business.

Whoever forges partnership, owns it. If partnerships are usually formed by an individual only, we would conclude, that only individuals own it. Think about sole-proprietorships. One person usually forges it. Therefore you can judge even without knowing the history of a particular sole-proprietorship business that it is owned by one person. But partnership is not like that. It is rather forged by a group. All the steps required for creating partnership are usually undertaken by a team. This is peculiar or a characteristic with all partnerships, not just a few of them, and so, we can conclude that since all partnership share this trait, it is an aspect of their nature. And since usually the steps and formation is done by a team, the ownership is also due them. We must vest it on them. As those who take the steps to form a business, they would not fail to register the business to their name, which would signify that they own it. The document signifies not only that they forged it, but that the government recognizes and approves them. When such a paper they have that attests to their creator-ship, no one then can fail to vest the creation on them.

      3. IT IS MANAGED BY A TEAM

If we must base our judgement on the characteristics of partnership, which is a wise thing to do, we would assert that partnerships are managed by a team. The team consists of all the original formers; those who defined, planned, raised capital and built the business by taking every step of creation. 

We would be forced to accept this as fact, when we observe partnerships. Observe as many of them as you can. Infact, study them or meet and enquire directly from their authorities. You would learn that the business is managed by the team that founded it. All partnerships that we have seen, have their affairs; controlled by the team. This tradition of management by a team, is due to the fact that it is forged by a team. Legally a man has access to sovereignty over his entity. The establishment by a team gives them entitlement to the sovereignty. It is prohibits exercise of sovereignty by a non member. Since by standard and tradition only the forgers exercise full sovereignty over business. It is important to stress that partnerships are void of management by an individual, since this is one of the most distinguishing characteristic of sole proprietorship. What we found is usually a board which consists of the partners, usually exercising sovereignty over the business, instead of one man doing the job. When there is the need to secure capital, the entire team engages in meeting to deliberate how to raise it. When there is need to increase production, decisions as to how to achieve it are usually done collectively by the partners. When there is need for any major change in the business, they would meet to deliberate on it and reach a conclusion. All the partners are always involved in remote of affairs. 

      4. THE BENEFITS ARE REAPED BY THE PARTNERS.

Consider this. You own a house that features a garden. This garden belongs to you because you built it with the house. In the garden you grow a fruit. When it ripens, you have the right to pluck of it. Infact, as the only owner, you are the only one that has access to it. No one else resides in the house with you that could even have access to it. Even if you cohabit the house with someone, he must seek your permission to access it, if he never built it with you. No one would question your right to reap the dividends of your hard work. Except you grant another person access to the farm, no one else would share it with you.

But the case would be different if the fruit were grown not only by you but others, perhaps at a farm somewhere, not in your garden. If all of you built the farm and grew the fruit, when it ripens, all of you have the right to pluck from the fruit. As the owners of the farm, you have right to enjoy the benefits of your farm. After-all that is how other farm owners enjoy theirs.

Now as it is with a farm so is it with business. If an individual starts a business, he has right to the profits. But if he started it with others, all of them would also have access to the profits, as the owners. Partnerships are usually started by a team, and all of them are entitled to the profits of the business. It is not a right that is due only an individual but the entire team. Usually the profits is shared in percentages, as agreed by the formers, and sometimes according to the capital contributed by each individual. The higher a person's capital the higher interest he would receive. And if otherwise, the same would be applicable.

    5. THE RISKS ARE BEARED BY THE TEAM

All the risks in partnership business affects the team. When a danger occurs every partner usually shares in it. It does not affect an individual only, an individual does not own it. Partnership is like a business owned by a team. When something bad happens to the building it means the property of each one of them has been affected. Because they each own it. As all the partners are involved in the activities aimed at the furtherance of the business, they stand a chance to be affected. If plenty people are in a ship and it capsides, all of them would be affected. 

Usually all takes part in management, and so any effect of mismanagement would affect them all.

When the business fails to receive patronage and frozes, it means that there has occured a stop to the source of income of all the partners. When, due to inability the business does not recover it's capital, it means that all the members have lost each of their money which they contributed to the formation. When due to failure to meet legal requirements the government asks the business to stop operations, all the members would be affected by that policy, because their sources of income has been affected, and any penalty given to them by the government would surely have a bearing on all of them. 

6.IT HAS LIMITED LIABILITY PROTECTION 

A loan is a deal between the giver and collector. The collector could be a business entity. When they approach the giver, the receive the loan on an interest base. They promise to return the loan with interest. When they do not repay, they risk being penalized legally. The giver has the right to sue the receiver and claim for damages. Some of those who collect loans are not only individuals but also business. Sometimes business are not able to repay the loan they acquired. And the givers are left with no options but to; sue them or take their collateral as compensation for the loan. Suing a business man for his inability to repay a loan could affect its reputation. And if his properties has to be collected as collateral, it would be detrimental to him. In partnerships, when a loan is collected, there is the possibility that it could not be repaid. All the members of the team collectively collected this loan because it is their business. But despite this, they cannot be held responsible for this inability. Their properties can also not be used as collateral. It is because there is a sort of protection that prevents those whom they are indebted to from suing the members of the business directly. It is the limed liability protection which all partnerships enjoy.