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
- 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
- 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.