Evaluate the pros and cons of the partnership as a form of business ownership.
Pros of the partnership as a form of business ownership:
- Ability to share responsibilities and capitalize on complementary skills: Partners can share the burden of running the business, which can ease the workload.
- Ease of formation: Forming a partnership is easy.
- Possible tax advantages: The earnings of a partnership are untouched by the IRS and are taxed only as the partners' personal income.
Cons of the partnership as a form of business ownership:
- Unlimited liability: As a general partner, you're not only liable for your own mistakes, but also for those of your partner's.
- Potential for disagreements: If general partners can't agree on how to run the business, the conflict can complicate and delay decision making.
- Lack of community: If a current partner withdraws from the partnership, the relationships among the participants will clearly change, potentially ending the partnership.
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