What are the disadvantages of operating as a partnership?
- There is unlimited liability and each partner is personally responsible for the debts of the partnership. As a partner, therefore, your personal assets may be seized to pay off debts.
- All partners can be held responsible for any one partner's negligence.
- Problems can occur when there are disagreements between partners.
- It is possible for an individual partner to make business decisions without informing the other partners, including the running up of debts or signing of credit agreements.
- If a partner resigns, dies or goes bankrupt, the partnership must be dissolved.
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