THERE ARE SEVERAL advantages associated with a business partnership. The first thing is that unlike limited liability companies or corporations, there is no requirement that it must be registered as such by your state. This translates into a lot of saving because of the hefty fees involved. With a partnership, there is no need for filling tax returns for the business and those of the owners separately. This can be a bit tricky, however, because a partner’s business dealings is legally binding to the others. That is why a person should be choosy when it comes to selecting the person to enter into a business partnership with. It should be a person you have total trust in. A partnership agreement is essential when you are a starting a partnership business. The agreement should specify the share of profits or losses each partner is going to get, sharing of duties, and how to handle the retirement or death of a partner.
Business Partnership Advantages
With a partnership, all the partners contribute toward the start-up capital of a business. This means that the business will have a strong financial strength. It will be at an advantage compared to start-up businesses with low capital. More capital means that the potential for growth will increase. This will translate to more profit for the business.
Forming, running and managing a partnership is normally easy. Compared to corporations, their regulation is less strict. The fact that it is only the partners who have a say on how the business is run gives it a lot of flexibility. They will just need all the partners to agree on a particular issue. This is unlike public companies where shareholders have a say on how the company is run.
3. Shared Responsibility
There is sharing of responsibilities among partners in the running of this type of business. This allows them to utilize their abilities and skills in running the business. Work is usually split according to the skills and time of each partner. If a partner is good at sales, he or she might be assigned the duty of overseeing the sales operations of the business. A partner who is good with bookkeeping can be assigned the duties of handling the business’ accounts. The fact that partners are actively involved in running the business translates to reduced management costs.
4. Decision Making
With a partnership, it means that decisions are coming from different people. They are laid on the table, discussed, and the best ones are chosen. Unlike a business owned by a single person, a partnership utilizes many brains to come with ideas. The partners also brainstorm to come up with solutions for any problems that may be affecting the business.
Unlike public companies that must publish their accounts, with partnerships, there is no such statutory obligation. This means that the keeping of business secrets is easy. Even when the business is not performing well, it is hard for other people who don’t hold any interest in the business to know.