. Choose Wisely: The Risks of Establishing General Partnerships Which of the following is an advantage of a corporation over a partnership quizlet? There are several advantages of a corporation over a partnership, including:
1. Limited liability: shareholders are only liable for the amount they invested in the company, and not for any debts or liabilities incurred by the company.
2. Increased capital: corporations can raise capital by selling shares, which is not possible for partnerships.
3. Perpetual existence: corporations exist indefinitely, even if shareholders die or leave the company, whereas partnerships dissolve when any of the partners leaves.
4. Separation of ownership and management: shareholders own the company, but are not involved in its day-to-day operations, which are managed by the board of directors.
Which of the following is a disadvantage of a corporation when compared to a partnership?
There are several disadvantages of a corporation when compared to a partnership. One disadvantage is that a corporation has a higher level of taxation than a partnership. Another disadvantage is that a corporation is less flexible than a partnership when it comes to making decisions. Additionally, a corporation is required to have a board of directors, which can be costly and time-consuming. Finally, a corporation may be less personal than a partnership, as it can be difficult to build relationships with other shareholders.
What are the disadvantages of setting up a limited versus general partnership?
There are a few key disadvantages to setting up a limited partnership as opposed to a general partnership. First, limited partnerships are considerably more expensive to set up, as they require the filing of additional paperwork with the state and the payment of associated fees. Second, limited partnerships are subject to more stringent regulation than general partnerships, meaning that there is more compliance work required on the part of the business. Finally, limited partnerships tend to be less flexible than general partnerships when it comes to decision-making, as the limited partners have less control over the business.
Why should we choose general partnership? A general partnership is an agreement between two or more individuals to run a business together. Each partner contributes money, property, labor or skill, and shares in the profits and losses of the business.
There are several reasons why you might choose to form a general partnership:
1. Easy to form and dissolve. A partnership is relatively easy and inexpensive to create. You simply need to draft and sign a partnership agreement. And if you decide to dissolve the partnership, there are usually no formalities required.
2. Flexible management structure. Partners can decide how the business will be run and how profits will be divided. This can be helpful if you and your partners have different ideas about how the business should be operated.
3. Tax benefits. Partnerships can pass through profits and losses to the partners, which means that the partnership itself is not subject to income tax. This can be a significant advantage over other business structures, such as corporations.
4. Personal liability protection. Partners are not personally liable for the debts of the partnership, with a few exceptions. This means that creditors can only go after the assets of the partnership, not the personal assets of the partners.
5. Access to capital. Partners can pool their resources to raise capital for the business. This can be helpful if you would have difficulty raising capital on your own.
6. Shared risk. Partners share the risks and rewards of the business, which can be beneficial if you are starting a business with limited personal resources.
7. Shared knowledge and skills. Partners can share their knowledge and skills, which can be helpful in running the business.
8. Motivation. Partners can provide motivation and support to each other, which can be helpful in running the business.
9. Personal satisfaction. Partners can take pride in owning and running their own business.
10. Exit strategy. Partners can sell their interest in the business to another
What are the kinds of risk associated in business? There are four main types of risk associated with business: financial, operational, reputational, and compliance.
1. Financial risk is the possibility that a company will not be able to meet its financial obligations. This type of risk can lead to bankruptcy.
2. Operational risk is the possibility that a company will not be able to meet its operational obligations. This type of risk can lead to shutdowns or disruptions in service.
3. Reputational risk is the possibility that a company will suffer damage to its reputation. This type of risk can lead to a loss of business.
4. Compliance risk is the possibility that a company will not be able to comply with laws and regulations. This type of risk can lead to fines and penalties.