When looking to create a business or grow an existing business, you would be wise to investigate the different business structures that could be used. Organizational structures form the basis of the workings of any business; therefore, it is perhaps one of the most fundamental decisions that you will make.
If you are interested in the possibility of creating a partnership business, it is a good idea to consider the advantages and disadvantages before making a committed decision. By applying this information to your unique circumstances, you will be able to make a decision that is in the best interests of your business.
The potential advantages of a partnership
Every new business needs capital to be able to fund their venture. By having multiple partners, you will stand a better chance of securing funding that can help your business to succeed.
Also, more partners bring in more expertise into the business. If you make sure that your partners have diverse areas of expertise, you will be able to increase specialization in certain areas.
The potential disadvantages of a partnership
One of the biggest disadvantages of a partnership is the fact that liability is unlimited. This means that partners will not be financially protected if the business goes into debt.
Partners will also be subject to self-employment tax on all nonexempt profits made in the business.
If you are considering starting a business, you should look into the possibility of creating a partnership alongside other options. You may decide to investigate the advantages of sole proprietorships and limited liability companies (LLCs) as part of your research.
