Imagine that you are forming a partnership with two other partners. All three of you have cash to invest in the business as well as skills to contribute. Two of your partners will provide services, along with investing cash.

• Are there any details you think should be included in the partnership agreement? What disadvantages should you be aware of when forming a partnership?
• How will you allocate income or loss? Will you also include a salary allowance for the partners who contribute services?
• Allocation of partnership income among the partners appears on what financial statement?
• How will you handle the admission of the new partner if he or she purchases an interest in the partnership?