ENTREPRENEURSHIP ECOSYSTEM > Partnership

Partnership – advantages and disadvantages

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Maliha Islam:
Partnership – advantages and disadvantages
Advantages of a partnership include that:


* two heads (or more) are better than one
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* your business is easy to establish and start-up costs are low
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* more capital is available for the business
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* you’ll have greater borrowing capacity
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* high-calibre employees can be made partners
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* there is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
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* partners’ business affairs are private
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* there is limited external regulation
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* it’s easy to change your legal structure later if circumstances change.
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Disadvantages of a partnership include that:


* the liability of the partners for the debts of the business is unlimited
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* each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts
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* there is a risk of disagreements and friction among partners and management
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* each partner is an agent of the partnership and is liable for actions by other partners
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* if partners join or leave, you will probably have to value all the partnership assets and this can be costly.

* Source: https://www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/partnership-advantages-and-disadvantages

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