Advantages of a partnership include that:
· two heads (or more) are better than one
· your business is easy to establish and start-up costs are low
· more capital is available for the business
· you’ll have greater borrowing capacity
· high-caliber employees can be made partners
· there is opportunity for income splitting, an advantage of particular importance due to resultant tax savings
· partners’ business affairs are private
· there is limited external regulation
· It’s easy to change your legal structure later if circumstances change.
Disadvantages of a partnership include that:
· the liability of the partners for the debts of the business is unlimited
· 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
· there is a risk of disagreements and friction among partners and management
· each partner is an agent of the partnership and is liable for actions by other partners
· if partners join or leave, you will probably have to value all the partnership assets and this can be costly.
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