A business with more than one proprietor has the benefits of a wider pool of knowledge, aptitudes, and contacts when compared to a business that is operated by a sole proprietor. Further advantages of this type of business include:
In a general partnership, each partner is responsible for the commitments and responsibilities of the business, unless a business “prenup” is signed. The predominant concern for this is if one or more parties decide to exploit the business in some way or make any mistakes, then all parties are responsible for the fallout, not purely those involved in the matter. Further disadvantages can include:
The alternative to a general partnership is a limited partnership, which operates in a similar fashion, however, there are limitations put upon the involvement of the partner’s personal assets and expectations in relation to the business.
The key advantages to this type of business are:
If a partner becomes active within the company, then they may earn a general-partner personal liability which then means that they will be fully liable for the business’s debts
Before creating a corporation, consider what you hope to gain from establishing this separate entity.
While corporations can certainly shield owners from liability, the downsides are sizeable and very costly: