A partnership is an association of two or more persons, known as general partners, who act as co-owners of a business and operate it for profit. The other two major forms of business are a sole proprietorship and a corporation. The particular rules about partnerships lead to the partnership advantages and disadvantages. There are many benefits and pitfalls of having business partners. 

 

If you have a right and good business partner there will be more advantages such as,

• A partnership may benefit from the combination of complementary skills of two or more people.

• There is a wider pool of knowledge, skills and contacts. It is quite often a good choice of legal structure for a new business.

• A partnership does not require the same amount of record keeping as a corporation. Another advantage of a partnership is that income is taxed only once. 

• By contrast, most corporations are taxed twice - they pay taxes on their income, and if there are shareholders, they in turn pay taxes on the share of the corporation's income that they receive as dividends.

 

• Easiness in business administration and sharing of stress.

• The losses of the firm and other associated risk in business are shared by the partners.

If you have wrong partners there will be more disadvantages such as,

• One of the most obvious disadvantages of partnership is the danger of disagreements between the partners. 

• The Profits must be shared with others. You have to decide on how you value each other’s time and skills. 

• The unlimited liability is a important drawback of partnership.

• The risk of loss of private property of the partnership influences the partners to avoid further risk and play safe.

• Inability to make quick decisions, and difficulty in getting unanimous decisions.

• The partnership may have a limited life; it may end upon the withdrawal or death of a partner.