Advantages and disadvantages of a partnership business

Understanding the pros and cons of forming a partnership business can better inform you about
how a business partnership works and help you decide whether this is the most beneficial
structure for your organization.

Advantages
● Stronger financial position. The ability to pool resources can provide your
business with more capital and access to new investors, while better positioning the
company to borrow money. Sharing business expenses with your partners can help
you save more than you might have on your own.
● Brain trust. Being able to share skills and institutional knowledge is a key benefit of
a business partnership. This can help broaden your expertise and the versatility of
your business.
● A broader network. By sharing contacts and connections with your business
partners, you can develop new relationships and expand your professional network.
● Fresh eyes. Bringing in partners can provide new perspectives on how you do
business by seeing things from a different angle. Partners can offer fresh ideas,
market strategies and inspiration to grow your business.
● Tax savings. If your business is set up as a general partnership, your company may
not need to pay income taxes. In Canada, a partnership by itself does not pay
income tax on its operating results and does not file a tax return. Instead each
partner includes a share of the partnership income or loss on a personal, corporate
or trust income tax return.1