Throughout their lives, some people decide to go into business for themselves. However, this doesn't mean that everyone wants to open a company on their own. If you're thinking about partnering with someone to form a company in Pennsylvania, here are the pros and cons of entering into a business partnership.
Pros of a business partnership
One of the main advantages of a business partnership is that it doesn't require a lot of paperwork. You and your business partner can form a general partnership and get business operations underway quickly. If you're not forming a general partnership, you'll need to submit a few forms and pay a fee.
A business partnership is also a potentially good way to get a break at tax time. You and your business partner will need to file an annual information return. However, the income in this return won't get taxed. Instead, this type of business formation is a pass-through entity. In a pass-through entity, the company's profits go to the partners. Then, they include this income on their individual tax returns.
Cons of a business partnership
It's important to remember that most business partnerships will be long-term endeavors. If you don't trust or like working with your business partner, coming to work each day could start feeling miserable.
If you form either a general partnership or a limited partnership, you could be risking your personal assets. Under these types of business formations, creditors can go after any partner if one of them has unpaid debts.
As you can see, there are advantages and disadvantages of forming a business partnership. Before you decide on having a business partner, make sure you're partnering with someone who can help your new company remain successful.