Introduction to Partnership Business
This is a form of business organization by two to 20 people. People who by agreement decide to run a
business together with the aim of sharing the profits or losses together. Example, Gani Fawehimi & Co.
Features and Characteristics of Partnership Business
1. It is owned by two to 20 people. But in the case of banking enterprises, it is two to 10 people.
2. The business capital is jointly contributed by the partners.
3. The partners run the business together and decisions are usually jointly taken.
4. The partners bear the risk and benefits together.
5. The business is not a legal entity.
Types of Partnership Business
1. Ordinary or General Partnership: In general partnership, partners have equal rights in the
business: the liability of members is unlimited. They will be called upon to settle the business
debts from their personal properties. They all take active part in the management of the
partnership business.
2. Limited Partnership: In a limited partnership, there must be, at least, one general partner with
the unlimited liability and others whose liabilities are limited to the amount of money (capital)
contributed. The limited partner does not take active part in the running of the business.
Types of Partners
1. Ordinary Partner or Active Partner: This partner takes active part in the day-to-day running of
the partnership business. He has unlimited liability.
2. Sleeping or Dormant Partner: This partner does not take an active part in the day-to-day
running of the business after the contribution of his capital. He has unlimited liability.
3. Limited Partner: He is prevented by law from taking active part in the running of the business.
He has limited liability.
4. Nominal Partner: This type of partner does not contribute capital to the business and does not
equally take active part in the management of the business. He only allows his name (goodwill)
to be used for the business because of the reputation or goodwill attached to his name.
Advantages of Partnership Business
1. Availability of sufficient capital to run the business.
2. There is sound management arising from expert bringing in their ideas to the business.
3. The business enjoys continuity. The exit of one partner does not lead to the end of the business.
4. It enjoys privacy because the business records are not made public.
5. It encourages specialization.
6. Individual burden is reduced since risks and liabilities are jointly shared.
This is a form of business organization by two to 20 people. People who by agreement decide to run a
business together with the aim of sharing the profits or losses together. Example, Gani Fawehimi & Co.
Features and Characteristics of Partnership Business
1. It is owned by two to 20 people. But in the case of banking enterprises, it is two to 10 people.
2. The business capital is jointly contributed by the partners.
3. The partners run the business together and decisions are usually jointly taken.
4. The partners bear the risk and benefits together.
5. The business is not a legal entity.
Types of Partnership Business
1. Ordinary or General Partnership: In general partnership, partners have equal rights in the
business: the liability of members is unlimited. They will be called upon to settle the business
debts from their personal properties. They all take active part in the management of the
partnership business.
2. Limited Partnership: In a limited partnership, there must be, at least, one general partner with
the unlimited liability and others whose liabilities are limited to the amount of money (capital)
contributed. The limited partner does not take active part in the running of the business.
Types of Partners
1. Ordinary Partner or Active Partner: This partner takes active part in the day-to-day running of
the partnership business. He has unlimited liability.
2. Sleeping or Dormant Partner: This partner does not take an active part in the day-to-day
running of the business after the contribution of his capital. He has unlimited liability.
3. Limited Partner: He is prevented by law from taking active part in the running of the business.
He has limited liability.
4. Nominal Partner: This type of partner does not contribute capital to the business and does not
equally take active part in the management of the business. He only allows his name (goodwill)
to be used for the business because of the reputation or goodwill attached to his name.
Advantages of Partnership Business
1. Availability of sufficient capital to run the business.
2. There is sound management arising from expert bringing in their ideas to the business.
3. The business enjoys continuity. The exit of one partner does not lead to the end of the business.
4. It enjoys privacy because the business records are not made public.
5. It encourages specialization.
6. Individual burden is reduced since risks and liabilities are jointly shared.
