What Are The TYPES OF PARTNERS IN A PARTNERSHIP BUSINESS
In this article, we will explain your different types of partners
in a partnership business.
A partnership is a type of business which may consist of two or more owners.
These
owners share profits.
Based on the type of partnership these partners may or may not take part
in the management of the partnership.
There
maybe several types of partners in a partnership business. Some of
them are explained below.
Memorize the types of Partnership
Types of partners are mentioned below
1. Working partner/Active
partner
A working partner is one who
actively takes part in the management of a partnership business.
He/she
contributes his or her share of capital while joining the business as a
partner.
Working partners have unlimited
liability. And share profit and losses.
2. Sleeping/ dormant partner
Sleeping partners are a bit lazy
so does not take an active part in the management of a business.
They contribute
their share of capital while joining the business.
They are bound by the
activities of the working partners. And shares profit and loss of the business.
They have unlimited liabilities just like the working partners.
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3. Secret partner
Though it takes part actively in
the running of the business. Secret partner’s involvement with the business is
not known to the public.
It might be because of the secret
partner has a bad reputation, for example, say, for the failure, in a previous
business or has some legal issues.
The secret partner has unlimited
liability. Shares capital and profit and loss of the business.
4. Nominal partner
A nominal partner is a person
who does have neither ownership nor any say in the running of the business?
Often an individual with good
networks and well known, whose association increase the credibility of the firm.
He/she does not contribute
capital neither has any share in the profit or loss of the business.
He just gets a fee for
allowing his name to be used In the business.
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5. Limited partner
Part owner of a company whose
liability to the debt of the firm is limited to the amount they have invested
in the business. Limited partners are also known as silent partners.
They might have restricted
voting power in selective issues or based on the partnership agreement. And do
not participate in the daily running of the business.
6. Partners in profit
A partnership business might
include some additional partners only because of their money and goodwill. This
kind of partner shares profit only.
Though they contribute capital
but they are not part of the management team.
They are liable to third
parties for the actions of other partners.
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7.Partner by Estoppel
This type of partners though
not entered in a formal partnership agreement, regarded as a legally binding
partner only because they represented by their conducts and words, as though,
they represent the
partnership, or allow others to represent themselves as such.Thus, they are liable for any
liability (loan) obtained by that firm on the basis of such representation.
8. Sub- partner
A sub partner is a partner who
shares the profit earned by a partner in a firm. he/she in no way connected
with the firm as a partner thus has no say in the daily management of the business.
He/she is not liable for the debt of the firm.
A General Partnership is a business structure in which at least two people oversee and work a business as per the terms and destinations set out in the partnership deed.
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