PARTNERSHIP
BUSINESS STRUCTURE- ADVANTAGES/ DISADVANTAGES
| Has more than one business owner, therefore more skills,
experience, management expertise available. |
| Relatively low startup costs. |
| Partnership losses go to partners and can be offset against other
personal income. |
| Privacy of affairs- Financial Statements don’t have to be
released to the public and don’t have to be audited. |
| Limited outside regulation |
| Easy to change the business structure. |
| Can raise finance by introducing another partner who provides this
rather than have to go to lending institution. |
| All partners are jointly and severally liable for the debts of the
partnership- this means
that one partner is liable for debts another incurred on behalf of the
partnership. |
| No protection for partner’s personal assets, which can be seized
to satisfy partnership debts. |
| Divided authority- more than one person making the business
decisions. |
| Lack of continuity- when a partner pulls out the business ceases. |
| Limitation on size. |
| Friction between partners. |
| Not as easy to obtain finance as companies- banks may require personal guarantee and security over personal assets. |
| May require professional advice when start- advisable to have partnership agreement if not man and wife partnership. |
| May be difficult to sell off the partnership business and get good price as it may be the case that a lot of goodwill is through personal effort and relationship with customers and partners. |
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