Benefits Of A Partnership Is The Trust Factor

1604 Words Jul 8th, 2016 7 Pages
Much like a sole proprietorships, the creation of a partnership is relatively simple and doesn’t require a large amount of legal documentation, although it is slightly more than a sole proprietorship requires. Also, a partnership is taxed as personal income for each partner, not as a separate entity. That being said, each partner can deduct the losses of the business from their own personal taxes if it is a general partnership. This could be an option for the four brothers and their cousin, Xavier. This would make sure that the business is only run by the family and it gives everyone an equal say in the decision making of the farm. It also would help that the farm would be taxed only as personal income for each of them.
The major disadvantage to a partnership is the trust factor. Going into a partnership with someone can be a major risk, depending on who the partnership is between. The partners have to be in full trust of each other to not do any harm to the business and to treat each other fairly at all times. If one partner does something wrong, such as embezzling money, then both parties are equally liable for the damages caused. If the four brothers are in full trust with each other and Xavier to operate the business fairly and in accordance to the law, then a partnership would be a great option for them.
A corporation is the most commonly known business classification in the world today. All the major companies, such as McDonald’s and…
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