Partnerships are generally an inexpensive and easy way to structure your business. Usually, when structuring a partnership majority of the time will be spent drawing up the partnership agreement.
Shared Financial Commitment
In a partnership, your investment can/will be equal to a percentage of ownership. Typically, partners come together with resources for one goal. This works when these resources are credit lines, money or Net 30s.
Complementary Skills
A good partnership should reap the benefits of utilizing the strengths, resources, and expertise of each partner.
Partnership Incentives for Employees
Partnerships are not limited to the number of partners and give owners the opportunity to have an employment advantage over other entities if they offer employees the opportunity to become partners. Partnership incentives often attract highly motivated and qualified employees.
DISADVANTAGES
Joint and Individual Liability
Like sole proprietorships, partnerships retain full, shared liability among the owners. Partners are liable for their actions and the business debts and decisions made by other partners. Also, the personal assets of all partners can be used to satisfy the partnership’s debt.
Disagreements Among Partners
With multiple partners, there are bound to be disagreements Partners should consult each other on all decisions, make compromises, and resolve disputes as amicably as possible.
Shared Profits
Because partnerships are jointly owned, each partner must share their business’ successes and profits with the other partners. An unequal contribution of time, effort, or resources can cause discord among partners.
