2.2 PARTNERSHIP
This is where more than one person enters into a joint venture and run a business together. The profits are split on an agreed percentage basis. Money drawn by the partners against profits is known as drawings but could also be as a result of the partnership making profits. Firms of accountants and lawyers would make use of a partnership.
Partnership does not protect the individuals in case of insolvency. If the sole trader or the partnership went into liquidation the individuals involved could be liable for the debts and may lose personal assets. Partnership income is accounted for in an individual’s tax return.
We now have something called a profit company which is a personal liability company and would give some protection to the partners under certain conditions. It must have incorporated - Inc after its name.