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Partnership Advantages and Disadvantages
There are distinct partnership advantages and disadvantages.
Before going into partnership advantages and disadvantages and especially before starting a partnership, let's first define "partnerships" and make sure we know how they operate. The particular rules about partnerships lead to the partnership advantages and disadvantages.
Partnerships Defined and Explained
A partnership is an agreement between two or more people to finance and operate a business.
Partnerships, unlike sole proprietorships, are entities legally separate from the partners themselves. In a general partnership, however, profits and losses flow through to the partners’ tax returns.
Each general partner has equal responsibility and authority to run the business. Each partner should be involved in day-to-day operations of the business, and should make management decisions. Any partner may represent the business without the knowledge of the other partners—the actions of one partner can bind the entire partnership. If one partner signs a contract on behalf of the partnership, the general partnership and each partner are responsible for that contract. The shared ownership concept that characterizes a business partnership gives it certain distinct advantages and disadvantages.
Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement. In a partnership agreement, the following arrangements, among others, should be spelled out:
1. How the business will be financed.
2. Who will do what work.
3. What happens if a partner dies.
4. What happens if one or both partners want to dissolve the partnership.
It is strongly recommended that an impartial attorney be contacted to write the partnership agreement. Here's how to find the right attorney.
Business Partnership Advantages
• Partnerships are relatively easy to establish.
• With more than one owner, the ability to raise funds may be
There are distinct partnership advantages and disadvantages.
Before going into partnership advantages and disadvantages and especially before starting a partnership, let's first define "partnerships" and make sure we know how they operate. The particular rules about partnerships lead to the partnership advantages and disadvantages.
Partnerships Defined and Explained
A partnership is an agreement between two or more people to finance and operate a business.
Partnerships, unlike sole proprietorships, are entities legally separate from the partners themselves. In a general partnership, however, profits and losses flow through to the partners’ tax returns.
Each general partner has equal responsibility and authority to run the business. Each partner should be involved in day-to-day operations of the business, and should make management decisions. Any partner may represent the business without the knowledge of the other partners—the actions of one partner can bind the entire partnership. If one partner signs a contract on behalf of the partnership, the general partnership and each partner are responsible for that contract. The shared ownership concept that characterizes a business partnership gives it certain distinct advantages and disadvantages.
Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement. In a partnership agreement, the following arrangements, among others, should be spelled out:
1. How the business will be financed.
2. Who will do what work.
3. What happens if a partner dies.
4. What happens if one or both partners want to dissolve the partnership.
It is strongly recommended that an impartial attorney be contacted to write the partnership agreement. Here's how to find the right attorney.
Business Partnership Advantages
• Partnerships are relatively easy to establish.
• With more than one owner, the ability to raise funds may be