Partnership

One alternative available to a sole trader in such a position may be to take one or more business partners. The firm (as a partnership is usually called) is then owned by the partners, who have the benefit of increased capital, allowing the business to expand. The former owner can now share the responsibility for control with the other partners, who may also bring with them wider experience and the opportunity for the business to specialize. The private nature of the business, meantime, is preserved. The partners are, however; still responsible for the debts they incur right down to the very barest essentials of life (much as the sole trader was). In addition, all business decisions must be taken with the full agreement of both (or all) the partners. Disagreement may lead to the breaking up of the partnership, and the death of any one of the partners could make it difficult for the firm to continue if the deceased partner’s share of the business has to be withdrawn to settle his estate. In most cases, partnerships are quite small business entities, and in the context of shipping business are perfectly appropriate for the activities mentioned under the heading of Sole Traders. There are exceptions however, in the UK and many other
countries where unlimited liability is a condition of law firms (solicitors) being permitted to practice, regardless of the size of the firm.
Some countries also sanction a type of “Limited Partnership” designed to protect non-executive partners (i.e. those who are merely providing capital for the firm) by limiting their liability to the extent of their financial participation in the firm.