Some pros for limited partnerships are that investors are more attracted to these kind of business formations, assets are protected, and the benefit of pass through taxation. A con for a limited partnership that could also be a pro in Gloria and her husbands’ situation is that out-of-state investments outperform in-state investments by 2.02 percentage points with a t -statistic of 4.7 making it obvious that out-of-state investments outperform in-state investments (Hochberg & Rauh, 2013). This is a great pro for Gloria and her husband since they are wanting to go worldwide. A general partnership is similar business formation as sole proprietorship with no protection of assets but with general partnership there is more than one person to create a partnership. As stated by Mandell and DiPasquale, unlike a limited partnership, a general partnership does not require a formal written agreement. You can verbally agree to start a venture with someone and create a general partnership with all its liability problems (Mandell & DiPasquale, 2017). Since there is no protection of assets, the con to a general partnership is that one of the partners can decide to make a business deal under the partnership name and if it falls through, then all partners associated with the partnership would be financially responsible for the
MEMO TO GLORIA SMITHSON 4 debt. Some of the pros to a general partnership are no business taxes, inexpensive to form, and can be as simple and flexible as you need it to be.
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