What are the advantages and disadvantages of a general partnership?
Answers
Advantages of a General Partnership: Businesses as partnerships do not have to pay income tax; each partner files the profits or losses of the business on his or her own personal income tax return. This way the business does not get taxed separately. Easy to establish. There is an increased ability to raise funds when there is more than one owner Wider pool of knowledge, skills, and contacts. Improved management with more than one owner. Disadvantages of a General Partnership: Partners are jointly and severally liable for the actions of other partnership obligations including contracts, torts, and breaches of trust. Joint and several liability means that if a third party were to sue the partners, the third party can sue any one of the partners without suing all of them. If a partner has been sued but cannot pay the third party the full amount, the third party may collect the money from the remaining partners. Each partner is individually liable for the debts and obligations of the business; if the business does not have enough assets to pay back business debts, creditors can take the personal assets of the partners. A partner cannot transfer interest in the business without the unanimous consent of the partners. Partnerships can potentially be unstable because of the danger of dissolution if one partner wants to withdrawal from the business or dies.
ANSWER
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General Partnership :- In a General partnership the liability of each partner is a limited it means the firms creditors can will realise their dues in full forms any of the partners by attaching their personal property if the firm's assets are found to be inadequate to pay of its depth an an exception is made in the case of a minor partner who is liability is limited to the amount of his share in the capital and profits of the firm each partner of a General partnership is entitled to take an active part in the management of the firm unless otherwise decide by the other partners.
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