Formation and dissolution of partnerships
Formation of partnerships:
In order to form a partnership, two or more individuals must agree to co-own and operate a business for profit. It is important for the partners to have a written partnership agreement, also known as articles of partnership, which outlines the terms and conditions of the partnership. This agreement should include the name and location of the business, the capital contributions and duties of each partner, the method of dividing profits and losses, and the rights of each partner upon dissolution of the partnership.
Dissolution of partnerships:
A partnership can be dissolved when a new partner is admitted, a partner withdraws, retires, dies, or becomes bankrupt. At this point, the remaining partners may choose to continue the business by signing a new partnership agreement, or they may decide to dissolve the partnership and wind up the business. There are several factors that can lead to the dissolution of a partnership, including disagreements among the partners, changes in the business environment, or the inability of the partnership to pay its debts. It is important for the partners to have a plan in place for dissolution in order to minimize any potential disputes or legal issues.