008 PAST ADJUSTMENTS II ONE SHOT II II 7 IMP QUES II (PARTNERSHIP FUNDAMENTALS)

Описание: 00:00 Introduction and Concept
01:52 Explanation with Ledger
03:12 Ques 14
06:11 Ques 15
08:41 Ques 16
10:16 Ques 17
13:16 Ques 18
15:51 Ques 19
20:41 Ques 20



In a business partnership, a partner's compensation can consist of a fixed salary, a performance-based commission, or a hybrid of both, depending on the terms outlined in the partnership deed. Unlike an employee's compensation, a partner's remuneration is an allocation of the business's profits and is subject to specific tax and legal provisions.
Partner salary
A partner's salary is a fixed, regular payment for services provided to the firm, such as managing day-to-day operations.
Source of payment: The salary is an appropriation of the firm's profits, not an operating expense in the same way as an employee's salary. If the business has no profits, a partner may not receive a salary unless explicitly specified as a charge against profits in the partnership deed.
Predictability: It provides the partner with a stable and predictable income stream, regardless of short-term business performance.
Payment frequency: It can be paid monthly, quarterly, or at other regular intervals as agreed upon in the partnership deed.
Eligibility: Typically, only "working partners" who are actively involved in the business are eligible for a salary.
Partner commission
Commission is a variable, performance-based payment that incentivizes partners to drive specific business outcomes.
Calculation methods: The commission can be calculated in several ways:
A percentage of net sales.
A percentage of the net profit before or after charging the commission.
A percentage of the profits available for distribution.
A flat fee for each new client or sale.
Financial incentive: Commission motivates partners by directly linking their earnings to their performance and the firm's profitability.
Key driver: It is used to drive targeted activities, such as increasing sales, generating new business leads, or growing revenue.
Performance tiers: Higher commission rates may be offered for exceeding sales targets or achieving specific milestones.
Salary plus commission (hybrid model)
Many partnerships use a hybrid model to balance the security of a fixed salary with the incentive of a performance-based commission.
Components: This model includes a base salary for financial stability, with additional commissions or bonuses based on individual or firm performance.
Example: One partner might receive a base salary for administrative work, while also earning a commission for bringing in new clients or successfully completing new projects.
Governing factors for partner compensation
For a partner to receive either a salary or a commission, the following conditions must be met:
*Partnership Deed: The compensation structure must be clearly documented in the partnership deed. Without this provision, a firm cannot legally pay partners a salary or commission.
*Profitability: Compensation to partners, particularly commission, is an appropriation of profit. It can only be paid if the firm is profitable, unless the deed specifies that it is a charge against profits.
*Legal limitations: In many jurisdictions, the amount of partner remuneration that can be deducted as a business expense for tax purposes is subject to statutory limits based on the firm's profits.