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Operating as a Partnership

A Partnership is a business structure, it is similar to the Sole Proprietorship. The major difference between a Partnership and a Sole Proprietorship is the amount of owners exceed one individual. A Partnership has a larger emphasis on delegation of duties. As such, contracts are usually used between partners to limit their exposure to some liabilities.

Here are some items to consider when operating as a partnership

  • If you operate through a placement firm, you may be subject to EI and CPP deductions.
  • The year end of the business can be manipulated.
  • You may have to track your sub contractor expenses incurred in order to earn the contractor income.
  • All business profits are divided among the partners based on their agreements and included in the respective partners personal income

Advantages

  • Easy to set up business
  • Low costs associated to the set up of the business
  • Management, profits and assets are directly split among partners based on their agreements
  • No corporate income taxes

Disadvantages

  • No legal difference the partner and the business – Similar to operating as a Sole Proprietorship
  • Suitable partners are difficult to find
  • Increased potential for internal conflicts among partners
  • Partnership contracts can be difficult to amend
  • Financing is difficult to obtain
    • Partners are usually responsible for raising capital. It is can to be easier than a Sole Proprietorship as there are more individuals to contribute.
  • Unlimited liability
    • Each partner can be jointly and severally liable for the infractions of their partners.

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