Disadvantages Of Limited Partnership

788 Words4 Pages
Partnerships General partnership. A general partnership is utilized when two or more people want to start a business. In most respects, the business is divided equally between the owners which includes, profits, debts and management of the business and any losses to the business are to be deducted from personal taxes. Mann & Roberts (1979) comments although not required, development of written agreements concerning the division of the business and how it will be managed removes doubt and ensures everyone is traveling in the same direction (p. 47). The disadvantage of this form is everyone is unlimited in the liability of the business. It does not matter if the others disagree with an issue and one party enters into an agreement of debt, all are now…show more content…
This form would require the family to determine how each will be involved in the business and how the business formulation will transpire. An advantage to this form is limited partners are able to invest in the company while not incurring any liability except the investment. This also allows the limited partners to share in the profits which means other family members would be allowed to invest into the family business. This model fits well if the owner of the business is Xavier and the limited partners would be Alex, Bill, Carl, and Devon. This means that the brothers would sign over the business, yet the value of the business would be considered the assets of the business. The disadvantage of this business is the brothers as limited partners have no other rights or management rights in the business. Another disadvantage is the requirements for filing the right paperwork properly, otherwise the business reverts to a general partnership and consequently places all parties with unlimited liability. The disadvantages are a major point of discussion, especially from a Christian world view perspective and possibly hinder this as a positive option for establishing this
Open Document