3. Complete the following sentences with suitable forms of the following words:

fiscal, invest, responsible, sole, liable, conducting, drawbacks, shared, exist.

1. You are self-employed and fully for all the aspects of the management

of your business.

2. In individual proprietorship the owner is in charge of the business and

is responsible for its success or failure.

3. Although this form of small business has its advantages, it has certain .

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4. The single owner is seldom able to as much capital as can be secured by

a partnership or a corporation.

5. They are personally for all the debts of their business.

5. Profits and losses are between all partners.

5. A partnership contract may include general policies, distribution of profits,

responsibilities, and a specific length of time during which the partnership

is in effect.

8. A company is usually formed for the purpose of business.

8. A company continues to despite changes in its owners.

III. Intensive Reading Task

Read and translate the following text. Consult a dictionary if necessary.

Partner’s responsibilities and powers

In most partnerships, the various partners perform different but complementary jobs. The roles to be played by the partners should be described in the agreement as clearly as possible.

Making such terms clear beyond the possibility of misunderstanding may be impossible. But the effort should be made. The management responsibilities and the amount of time to be devoted to each can obviously vary widely. Insofar as a determination of such details can be made, it should be.

Court cases involving partners frequently hinge on the question of whether one partner is devoting enough time and efforts to the business. That fact alone suggests the importance of the advance thinking put info this part of the agreement. A number of related questions should receive attention.

Profits and losses

The most basic method of providing for equitable distribution of profits and losses is simple. The partners simply agree to distribute profits according to the investment of each partner in the business. A partner who contributes 25 % of the funding for the partnership, receives 25 % of the profits. He or she also bears 25 % of the losses, if any.

That formula need not control in any given case. For any group of partners, another approach may be more appropriate.

The important thing is that the partners work the formula out in advance and include it in the agreement.

Among other important financial questions, salaries and expense accounts rank high. Unless the agreement contains provisions on salaries, for example, no partner would be entitled to anything more than a share of the profits.

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Dissolution of the Partnership

The terms of the partnership agreement should specify under what conditions dissolution may take place. Some examples suggest possibilities. In one case a partnership agreement provided that the business would continue if any of the four partners died or had to withdraw for health or other reasons. Thus, the agreement, in effect, ensured that a new partnership would take the place of the original one. The agreement also specified how the partner leaving the business, or that partner’s family, would be compensated in case of death or withdrawal. The partnership share could, of course, have substantial value.

In another case a partnership agreement contained a buy-sell clause.

Some buy – sell provisions provide for a departing partner’s right to select an arbitrator. The remaining partner or partners have the same right. After the two arbitrators have selected a third person to assist in the arbitration, the three jointly decide on the value of a partnership share. The decision is then final and binding.

A recommended way to make sure that surviving partners will be able to buy the share of a deceased or ailing partner is to buy life insurance on the lives of all the partners. The insurance provides the cash needed for the surviving partners to buy the deceased’s share.