A partnership business is a business that is composed of at least two owners or more. The owners provide the starting capital to ensure that their firm is steady and ready to operate. The partners are guided by a partnership agreement that they sign before starting the firm. This partnership agreement states the role and responsibility that every partner should do.
There are different types of partnerships that are a general partnership, limited partnership, and limited liability partnership. Under these types of partnerships, there are different kind of partners who are categorized by the role they play in the firm.
Types of Partners
They are also known as managing partners. This type of partners plays a major role in the business of managing all the firm’s assets hence the name managing partners. They are responsible for running the business.
They are also termed as agents since they carry on the business on behalf of the other partners. They are responsible for all day to day financial, legal, and human resource functions.
They also carry additional responsibilities and liability. In case an active partner wants to retire, he/she must give a public notice to notify the others that he is going to retire if he does not do that he remains liable for all the business acts.
They are also known as sleeping partners. As their role suggests, they do not play an active role in the business that is they do not participate in the day to day running of the firm. Just as active partners, he/she will share the businesses profit and also losses.
The partner is also entitled to contribute his share capital just like other partners in the business. Unlike the active partner, it is not a must he give public notice when he/she wants to retire.
They are also referred to as ostensible partners. This is partners who do not have any real interest in the business. He only lends his name to the firm. He does not make any contributions in terms of capital, and he is not entitled to any share of the profit the firm makes.
The primary role he plays is that he is only liable to third parties and people outside for deeds done by other partners. The business only takes advantage of his name either he is a prominent person in the country. He is useful for persuasion purposes only.
4)Partners by estoppel
They are also known as partners by holding out. This types of partners act as if they are real partners of the business whereas they are not. They are very different from nominal since their names are not used by the firm.
5)Partners in profits only
They only share the profit of the business. They have a limited liability with the firm meaning he shares none of the firm’s liabilities.
When starting a firm partnership act, the partners must know the age of the majority member. Minor partners are partners who have not attained the age of the majority. He shares profits of the firm, but on losses, he is limited since he has not reached the age of the majority.