A business run as a partnership shares control, responsibility and finances between two or more people. The partners are not only responsible for managing the business, but also “jointly and severally” liable for any debts incurred by the business and the profits are shared between the partners based on pre-agreed percentages.
Below are just a few examples of the advantages and disadvantages of running a business as a partnership.
Business Partnership Advantages:
- Business partnerships are relatively easy to establish; make sure time is taken to draft a partnership agreement to avoid future problems.
- With more than one owner, it may be easier to borrow money and raise capital to invest in the business.
- The business can benefit by using the knowledge base and experience of all of the partners.
Business Partnership Disadvantages:
- Business partners are liable for the actions of the other partners.
- Business partners, like sole proprietors are liable for the actions of the business.
- Since decisions are shared, disagreements can occur and therefore the decision making process can take longer.
We are happy to discuss your individual requirements and undertake a proper risk assessment enabling you to decide the best way forward for your business. Contact us today for a free initial consultation.
*Our network of TaxAssist Advisors is made up of independently owned and operated franchised locations. While many are, not all locations are operated by CPA members and some of the services listed here may not be offered by practices which are not operated by a CPA. Please call us on 888-547-9295 and we will connect you with the nearest office to you.
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