Partnership Advantages and Disadvantages/Examples

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Easier to attract investors because limited partners have limited liability to the business debts.

Advantages

Easy to establish.

Advantages

Improved management with more than one owner.

Advantages

Limited partners get to share in the profits and losses without having to participate in the business itself.

Advantages

Profits and losses pass through the business to the partners, who are taxed on their own personal income tax returns.

Advantages

Share liabilities/Less risk

Advantages

There is an increased ability to raise funds when there is more than one owner.

Advantages

Wider pool of knowledge, skills, and contacts.

Advantages

A partner cannot transfer interest in the business without the unanimous consent of the partners.

Disadvantages

Better work/Life balance

Disadvantages

Certificate of Limited Partnership must be filed with the state before the partnership comes into existence, which includes state filing fees.

Disadvantages

Disagreements

Disadvantages

Each partner is individually liable for the debts and obligations of the business; if the business does not have enough assets to pay back business debts, creditors can take the personal assets of the partners.

Disadvantages

General partner is personally fully liable for the debts of the business.

Disadvantages

Give up power to make decisions

Disadvantages

If the limited partner becomes active in the business he or she may have general-partner personal liability.

Disadvantages

Partnerships can potentially be unstable because of the danger of dissolution if one partner wants to withdrawal from the business or dies.

Disadvantages

Unfair share of work

Disadvantages

Convenience stores

Examples

Doctors

Examples

Lawyers

Examples

Nail Salons

Examples

Restaurants

Examples


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