Pros and Cons of Partnership Business

Pros and Cons of Partnership Business

Pros and cons of doing partnership business are important for many of you out there. Business is not as simple as it looks and the tricky part comes when you have to choose the type of your business. If you have missed our article on types of business ownerships click here. If you already know, that’s good, we are ready to go.

Partnership is one of the most commonly used business type after sole proprietorship. We have also discussed the three types of partnerships in business, click here to see them. Let’s have a quick look on what is partnership in business and if you already know, you are good to skip the next section and move directly to pros and cons.

Partnership form of business

Partners as we know means something that is shared between two or more persons. Partnership is another commonly followed type of business ownership and there are some important factors everyone needs to understand.

Partnership means two or more persons own a business. Their responsibilities depends on the agreements they have agreed upon. Most commonly followed partnership is that in which partners have equal division of responsibilities, tasks, working hours, investment and profit and loss. Partnership can be uneven as well. For e.g. Silent partners only invest and earn without taking part in any of the business activity. Their profit percentage is comparatively low than the business in which they are active.

Summary is that business owners sign an agreement before setting up the business and the share of responsibilities, time, work, profit and loss is decided. The decision making is done when all the partners are agreed.

Pros and Cons of Partnership Business

Partnership business pros and cons are as follows:


  • It is cheap because the expenses are shared between the partners
  • Simple to understand and set up partnership type of business as each partner signs an agreement of how much their share will be
  • More partners means more brains and better strategy and plan
  • More partners means more financial power
  • Better than sole proprietorship when it comes to connections and funds as each partner can have connections
  • Decision making is easy as there are partners to guide each other
  • Filing and other regulatory requirements by the state is relatively less
  • If in the future, your business’ legal structure needs to change, it will be quite easy
  • Responsibilities are divided among the partners


Disadvantages of partnership business are as follows:

  • Each partner is liable for every act made
  • If partner wants to leave, all other partners will have to face it especially if business is going down financially. It can be costly
  • Decision making can be easy and difficult at the same time if there is disagreement at any stage or event
  • Any profit gained will be shared by all the partners
  • Selection of business partner must be done carefully as it can create many problems in future
  • For the business debts, each partner will have infinite liability
  • Complexities in case of disagreements among the partners

This was all about the advantages and disadvantages of partnership business. We hope you like our sharing. Keep on visiting for more valuable content related to business and entrepreneurial tips. Comment us below about how much you like our content and share your experience with your fellows.

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