Page 140 - Business Principles and Management

Chapter 5 • Proprietorships and Partnerships

Businesses Suited to Being Partnership

The partnership form of organization is common among businesses that furnish
more than one kind of product or service. Each partner usually looks after a
specialized phase of the business. For example, car dealers often have sales and
service departments. One partner may handle the sale of new cars, and another
partner may be in charge of servicing and repairing cars. Still another partner
could be in charge of used-car sales or of the accounting and financial side of
the business. Similarly, if a business operates in more than one location, each
partner can be in charge of a specific location. Businesses that operate longer
than the usual eight hours a day, such as the retail food business advertised in
Figure 5-7, find the partnership organization desirable. Each partner can be in
charge for part of the day.
Partnerships are also common in the same types of businesses that are
formed as proprietorships, particularly those that sell goods and services to
consumers. It is especially popular among those offering professional services,
such as lawyers, doctors, accountants, and financial consultants. Internet busi-
nesses have been formed as partnerships as well. Good faith, together with
reasonable care in the exercise of management duties, is required of all part-
ners in a business.

BUSINESS NAME

A proprietorship or a partnership may be conducted under the name or names
of the owner or owners. In many states, the law prohibits the use of and Company
or & Co. unless such identification indicates additional partners. For example, if
there are only two partners, it is not permissible to use a firm name such as Jones,
Smith & Co., because that name indicates at least three partners. The name or
names included in the term “Company” must be identified by registration at a pub-
lic recording office, usually the county clerk’s office. Usually one can do business

FIGURE 5-7 An Advertisement Announcing the Opening of the Y, B,
and C Partnership

G
G Grand Openingrand Opening
Grand Openingrand Opening

of
Y, B, & C FINE FOODS

Groceries Bakery on Premises
Fruits & Vegetables Gift Baskets
Choice Meats Party Trays

August 20, 2007

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