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Advantages And Disadvantages Of Partnership

804 Words4 Pages

Partnership Partnership is a type of business entity in which a single business includes two or more persons share ownership or we can say it is an association that compromises of two or more persons. Further, below are the essential characteristics of a partnership firm: • Number of Partner: The partnership involves business by a group of individuals. There must be at least two persons or more to start a partnership. Each partner in the business share equal liability towards operations and affairs of the business. • Agreement: Usually, each partner contributes to all characteristics of the business that are income, assets or effort. Initially to be in a partnership they need to have agreement between partners it may be oral or written, …show more content…

Easy to establish. 2. Having more than one owner result in increased funding of capitals as two or more partners might have better capacity of contribution. 3. The grouping of complementary skills of two or more people in a partnership is also a plus point. Business Partnership Disadvantages 1. The partners are equally and individually liable for their actions and also for the actions of others partners. 2. Revenues must be shared with others partners. 3. The partnership may have a limited life. 4. The partnership is jointly operated by the partner, the limitation of freedom always exist. 5. The partnership creates unlimited liability as general partners are held liable for all debts of the business. General Impact of tax on different types of business …show more content…

We will start with sole proprietorship in which the owner and the business share the same entity , all the owners belongings and obligations are considered to be business belongings and obligations there the business is not consider as a separate taxable entity. In general type of partnership the business and the owners are not considered the separate entity therefore there is no separate type of tax in general type of partnership. It is pertinent to mention here that in certain countries as per corporate income tax law that stipulates that income from partnership must be taxed to individual partners. It means that after doing all the math of sharing profit and loss the partners shall be tax individually. In corporation of C type, the corporate is declared as a separate legal entity and normally these type of business form are also called regular corporations therefore, they are taxable. These types of corporation are normally are levied with double tax. Initially the tax is paid by the corporation and later by the owners on the dividend they received. Further, salary of owner is also taxable if it is withdrawn from the

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