Whether or not to be a sole owner or create a general partnership to run a business is a vitally important question in most business ventures. While there are risks in everything, the advantages of partnership can help lighten the workload and provide several distinct perks over going it alone. Some of the most important advantages of partnership include simplified tax filing, shared responsibility, the opportunity for a better initial finances, and the general fact that two heads are often better than one.
In many regions, a general partnership will allow a simplified tax filing process as compared to a corporation or limited liability corporation (LLC). In some places, the partners can actually avoid filing a separate tax return for the business, as is necessary when the venture is a corporation. Simplified tax procedures lead to fewer accounting errors and thus a lower chance of an audit, making this one of the most useful advantages of partnership.
Starting and running a business is incredibly taxing, both physically and mentally. Not only may the day to day work be a trial, but not all people possess all the skills necessary to create a successful venture. One of the advantages of partnership is that it allows entrepreneurs to find partners with complementary skills, so that the creative genius of the company does not have to worry about creating marketing strategies, while the marketing phenomenon does not have to go crazy trying to develop the next big product. Creating a partnership can strengthen the abilities of the business entity to handle all the aspects and curve balls of the big business world.
Raising venture capital is one of the most important parts of starting a business. Though some owners may be able to fund the business from their own pockets, most will need to turn to investors and funding schemes to raise the money needed to start or expand the business. Having multiple people out combing the fields for investors and raising funds is one of the major advantages of partnership. Usually, partners will also benefit from having different lists of contacts from one another, often doubling the amount of potential investors that can be approached.
While there are many advantages to business partnership, is is also important to consider some of the disadvantages. Partners must be able to trust one another, as any shady dealing on one side can leave the other legally liable. Additionally, splitting the company between two or more partners also means splitting the profits in a similar manner. Nevertheless, many people cite partnership as a key to creating the best possible environment for business success. By spreading the responsibilities and the work between a group of trustworthy individuals, a partnership has the opportunity to turn a dream of one original entrepreneur into a successful venture for all involved.