The pros and cons of general partnerships

Starting your own small business with other partners is exciting, but certain aspects of it can be daunting. If you have concerns about what type of business structure you should choose, you are not alone.

A general partnership may be a good choice for you depending on your unique business needs. Here are some of the advantages and disadvantages of starting a general partnership. 

Partnership pros

There are plenty of good reasons to form a partnership. The main benefits include the following:

  • Convenience: Creating a general partnership is easy, cheap and requires minimal paperwork. In fact, you do not technically need to file any paperwork to start a partnership. You and your partner(s) form a partnership by going into business. However, you may need to create a partnership agreement or file a "doing-business-as" application with the help of an attorney.
  • Simple taxes: There is a significant tax benefit to having a partnership. A partnership enjoys pass-through taxation, which means losses and profits are simply transferred to each partner. While the partnership will file a tax return as an entity that states its losses and profits, it does not actually pay any income tax. 

This may mean forming a partnership is right for you. 

Partnership cons

However, it is important to consider the downsides of beginning a partnership too:

  • Liability: You will have more personal liability if you are in a partnership rather than a corporation. If you go into bankruptcy or someone sues the business, you and the other partners are personally liable.
  • Management considerations: It can get tricky to manage a partnership when it comes to purchases, taking on clients or making investments. Things can get messy unless there are strict guidelines laid out in a partnership agreement. 

These drawbacks may make you reconsider creating a partnership. If so, a corporation may be better for you.

There are upsides and downsides to each business structure. You must carefully consider which entity type will suit you best.

No Comments

Leave a comment
Comment Information

Contact Us Now To Discuss Your Legal Needs

We know you have questions, and we will be happy to provide you with the answers and sound counsel you need. To get started, call our office in Wyomissing toll free at 888-434-9531 or fill out the form below. We will return your call or email promptly.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Huckabee, Weiler & Levengood, P.C.

1136 Penn Avenue
Wyomissing, PA 19610

Toll Free: 888-434-9531
Phone: 610-285-8386
Fax: 610-378-9896
Wyomissing Law Office Map

Review Us