What are the advantages and disadvantages of choosing a partnership business entity?

Advantages: 

• two heads (or more) are better than one. 

• more capital is available for the business. 

• you’ll have greater borrowing capacity. 

• there are usually fewer financial reporting obligations. 

• there are fewer administrative fees to set up a partnership. 

• costs and responsibilities are shared between partners. 

• you can share the load of running a business and specialise according to each partner’s strengths. 

• business affairs are private. 

• it’s easy to change your legal structure later if circumstances change. 

Disadvantages: 

• the liability of the partners for the debts of the business is unlimited. 

• each partner is jointly liable for the partnership’s debts and liable for their share of the partnership. 

• there is a risk of disagreements and tension among partners and management. 

• each partner is an agent of the partnership and liable for actions by other partners. 

• if partners join or leave, you may have to value all the partnership assets, and this can be costly. 

• If a general partnership has no provision regarding what happens if a partner leaves or passes away, then the partnership would collapse.