Assignment 2: Creating, Financing, and Marketing a Business
Professor Roderick D. Thomas
Introduction to Business
December 2, 2012
Identify the pros and cons of the partnership as a form of ownership. Partnership is one of most common forms of business. There are many advantages to business partnership as well as a few disadvantages. One advantage is that a partnership is easy to establish. This can be established through verbal agreement or through a contact. Another advantage is the ability to pool financial resources. The more capital a company has the faster they are able to grow their business. Partnerships lessen the burden on the individual running the business. Since more than one party is in charge responsibilities can be divided amongst each person. By dividing the task they can use their skills to the best advantage. The pass-through tax treatment is one of the most beneficial advantages of forming a partnership. With the pass-through there is no taxation to the business itself; all income, deductions, and credits, "pass through" to the individual partners and are reported on their individual tax returns. While the advantages of a partnership seem like the perfect way to start a business there are disadvantages. In a partnership you are not only responsible for the errors and misjudgments that you make but also for your partner’s. Both parties are equally responsible for the debt and obligations of the business. Like any other relationships, partnerships also have disagreements. Disagreements amongst partners can create bad turmoil and prevent the cooperation needed to keep the business focus. Disagreements can also lead to one of the partners wishing to withdraw from the partnership. This can cause insecurity about how long a business will stay operational. Lastly, a partner that extracts from a partnership is still held accountable for any debts or obligations the company had at the time of withdrawal. Discuss funding options for...
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