Partnership – Who will pay?

Sadly I know from personal experience that being in Partnership in business can be difficult and costly. Just as in life the same principle applies marry in haste repent at leisure

If you are thinking of going into business with someone else just be careful. Make sure you know them well enough to talk to about money. Be comfortable that you can work together in the good times and the bad

Why?

In an unlimited partnership, the partners are jointly and severally responsible for the partnership debts. This means that all of the partners are equally responsible for business debts. The partners will bear responsibility for paying the debts equally.

But if one partner can’t pay his share then the remaining partners will have to pick up that unpaid share. between them.

So, say, if you are one of two partners. One of you has assets and the other not then the one with assets will end up paying a disproportionate share of the debts. This hurts – I promise you.

If you haven’t previously taken an active interest in the finances of your partnership or taken advice on your partnership agreement, now is  the time to do so.

Tagged as: agreements, debts, partnership