Advantages and Disadvantages If Thomas and Bryan Form a Partnership

Advantages and disadvantages if Thomas and Bryan form a partnership

Advantages

For the startup, they do not have to prepare much for their legal documents to form a partnership. They just need to register their business with competent agencies themselves with free of charge and they fell free to start their business. They can combine their knowledge, skills and experiences to run the business effectively. They just have to pay income tax. This is very good for them as the income tax for partnership is quite low. They can make decision on business very actively and quickly in order to maximize business efficiency in a specific condition at a specific time. They do not have to disclose any information about their business to anyone so they can keep secret of their business data, plan and strategies. They do not have to spend time on unnecessary things such as paper work, report, just focusing on the sales of their products. If they are capable enough and do good sales of their products, they shall get good turnover, pay less tax, and get good profits.

Disadvantages

For partnerships, they have to take ultimate responsibility with creditors for the debt. They are responsible for the business activities of all other. Wrong decisions made by one partner in partnerships can negatively impact on all others partnership and may result in losses of money and capital of all partners. In case one partner dies or withdraws his capital, it is disadvantageous for the other partner to maintain or continue running the business and the business maybe terminate and close due to possible lack of skills or knowledge or financial sources. It is also not easy to sell the share of the partner in partnerships as it is not clearly value in any legal documentation. The distribution of profit in partnership is also a disadvantage for them. Though their capital contribution is