In partnership businesses all the partners need not actively participate in the business activity of the firm. According to their involvement in the business they are called active partner/ managing partner and sleeping partner/ dormant partner.
Active Partner or managing partner: An active partner is the capital investor in the partnership who actively involves himself in the daily operation of the partnership. The active partner participates in the management meeting and discusses with the other partners on business review and the action plan of the business for the ensuing period.
Sleeping Partner or dormant partner: A sleeping partner is a person who provides capital to the business and shares profit and loss as per the partnership agreement. However, he/she neither involves himself/herself in the business activity nor attends the management meeting of the firm.
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What are the other types of partners we notice in a partnership?
