Starting wholesale business with a partner – Why is it a wise idea?

When two or more persons agree to open a wholesale business and carry out its operations together, it is called partnership. When a single person is not confident about the success of the business venture due to shortage of capital, lack of skills, risk of loss, or management failure or any other reason, opening a wholesale business in partnership is a wise idea. Some basic features of a wholesale partnership business include: • The partnership can be formed by two or more persons, where the upper limit on the number of the partners is decided by the law. • The profit and loss of the Wholesale Business are shared among the partners according to the pre-agreed ratio. • A proper partnership deed is drafted, which defines all the rights, duties, and liabilities, method of dissolution of partnership. • The liabilities of partners are unlimited. In case the firm becomes insolvent, partners are required to contribute sufficient personal assets.rnSome of the reasons why wholesale suppliers must prefer selling wholesale products in partnership may includernMore Capital!rnMany small investors cannot open wholesale businesses just because dealing in bulk requires huge investment. When other partners also contribute in the capital of the firm, overall capital of the firm increases. Moreover, more capital helps the business to carry production and use machines on a large scale. The large scale production brings in economies of scale. rnWork Division!rnWholesale business is a large-scale business that requires dealing with the suppliers, handling accounts, managing employees, supervising production, and marketing. Unlike the sole proprietorship, the responsibility of work or business management is divided among the partners, which leads to better and easy business supervision. rnEasy Finance!rnIn case a business needs finance, banks or other financial institutions see the details of the business proposal and confirm business’s ability of repayment before risking their money. Since in partnership the responsibility of loan repayment lies on shoulders of all partners, banks feel more secure and flexible while lending to partnership businesses. rnCareful Decisions!rnEvery business needs to take in-time decisions related to Wholesale Products, and other aspects of business dealings. Under partnership business, decisions are taken by all partners after a great deal of discussion and with mutual consent. Decisions taken in this way not only develop mutual understanding and confidence among the partners but also reduce the chances of making wrong decisions. rnTax Advantage!rnThere is no compulsion in law to register a wholesale partnership business. However, if partners want to register their firm to have various advantages, they can do so. If partnership business is not registered, partners are required to pay taxes individually on their profits. There is no double taxation in case of partnership business. rnFewer Frauds!rnAccounts of a wholesale business are kept in a place so that all partners can easily access it. Examining, reviewing and checking of the books of accounts are the right of every partner. Since all the partners can inspect the accounts anytime, the chances of frauds automatically reduce. If frauds are neglected by one partner, they can be easily caught by the others.