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Project1 - Project1 RenataUsova Course:ACCT221...

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Project 1 04/25/2006 Renata Usova Course: ACCT221 Professor: Betty Strauss Part 1 Memo May 26, 2004 Partnership Advantages Disadvantages Easy to establish The establishment of a partnership is quite  easy and inexpensive. Unlimited liability The liability of general partners is  personal. Complementary skills The partners’ personal skills and abilities  can play a significant role in the  partnership successful functioning,  because they cam complement each  other, strengthening the partnership. Limited life The partnership can exist only with  participation of all its members. If one of  the members decided to leave a new  partnership should be established. Division of profits Profits are regulated in accordance to the  partnership agreement. Potential for conflicts Conflicts among partners can have a  negative result for the partnership work. Ability to attract limited partners Partnerships can attract limited partners  that usually play the role of investors. Difficulty in disposing  Partnership  agreement restricts how the partner can  dispose of its share . Little governmental regulation   State and federal regulations for the  partnerships are rather limited. Flexibility   Partnerships are very sensitive to market  environment changes and can quickly  react on them. 1
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Limited taxation Partnerships don’t have to pay federal  taxes. Corporation Advantages Disadvantages Separate legal existence The corporation separate and distinct from  its owners, the corporation acts under its  own name rather than in the name of its  stockholders. The acts of stockholders do  not bind the corporation unless such  owners are duly appointed agents of the  corporation.
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