While inexpensive to set up, a general partnership, potentially saddles the partners with big personal liability. As your business grows, consider a business structure that limits liability for owners, such as a limited partnership, limited liability company or corporation.
Pros and cons of a general partnership
Here are some of the pros and cons to consider for a general partnership.
Pros
Easy to start (no registration or incorporation required).
The partnership doesn’t pay taxes (income and losses pass through to the owners’ personal tax returns).
Compliance is relatively easy (e.g., no annual reports).
Partners can customize management and control to some extent via a partnership agreement.
Cons
Partners have unlimited personal liability for the actions of other partners and employees.
Disputes among partners can cause the business to fail, particularly in the absence of a partnership agreement.
This is not an appropriate business structure for raising investor money.