Ten Advantages to a Business Partnership

Many people are hesitant to enter into a business partnership and there are certainly some disadvantages to business partnerships that need to be considered.  But that is a topic for another blog.  The following are ten advantages to a business partnership:

1. Makes the business stronger by having the strengths of all the partners available to the business
2. Increases the amount of investment in the business, thus making lending to a partnership more attractive (in some cases) that it would be for a sole proprietorship. 
3. Gives the flexibility to the partners to have different "hands on" hours in the business.  One partner may only be able to work 25 hours a week on weekends in the evenings but the other partner can work 40 hours a week.  This will give good coverage to the business and the profits can be divided to reflect the actual time each partner works
4. Paperwork and tax filing for a partnership is similar to a sole proprietorship and therefore less costly than the tax requirements for a corporation.
5. Year ends are calendar year with the final income tax returns (the owners' personal returns) due in June. 
6. A partnership can hire employees. 
7. Family members of the partners can be paid employees of the business as long as fair value is exchanged. The family members provides the work and is paid the market rate. 
8. Succession planning may be easier as a potential buyer may be one of the partners. There is still legal requirements to transfer the ownership from two or more partners to one of them. 
9. Decisions can be made within the management/ownership of the business.  The partners can seek professional opinions if necessary and they can also arrange for an independent opinion in the case of disagreements amoung the partners.
10. The set up and dissolution of a partnership is easier than it is for a corporation. 

This is a brief overview. Before entering into a partnership it is suggested that you seek the advice of your lawyer and your accountant.