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In: Economics

Write at least 5 pros and cons of a partnership business ownership. And give 2 examples...

Write at least 5 pros and cons of a partnership business ownership. And give 2 examples of companies under this type of ownership.

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Expert Solution

  • PROS OF PARTNERSHIP Two or more persons in a business are better than one person
  • Partnership business is easy to establish and start-up costs are low
  • More capital is available
  • Greater borrowing capacity
  • There is opportunity for income splitting
  • Advantage of income tax saving
  • Partnership business affairs are private
  • There is limited external regulation
  • Easy to change legal structure

Cons of partnership

  • Unlimited liability of the partners for covering debt.
  • Each partner is ‘jointly and severally’ liable for the partnership’s debts; implies 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
  • Each partner is an agent of the partnership and is liable for actions by other partners
  • if partners join or leave, there is a need to value all the partnership assets and this can be costly
  • For example Nike & apple , Uber & spotify

Rahul Sunny answered 2 years ago
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