Loose Leaf for Fundamentals of Advanced Accounting
Loose Leaf for Fundamentals of Advanced Accounting
7th Edition
ISBN: 9781260151879
Author: Hoyle, Joe Ben; Schaefer, Thomas; Doupnik, Timothy
Publisher: McGraw-Hill Education
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Chapter 9, Problem 1Q
To determine

Describe the advantages and the disadvantages of operating a business as a partnership rather than as a corporation.

Expert Solution & Answer
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Explanation of Solution

The advantages of operating a business as a partnership rather than as a corporation are:

  • The ability to make virtually arrangements defining their relationship to each other that the partners desire.
  • Less hassle of forming a partnership.
  • Fixed oral agreement is required to form a partnership.
  • Operating costs are reduced and partners can make decisions which they desire.
  • Partnership can claim losses as tax and do not pay taxes.

The disadvantages of operating a business as a partnership rather than as a corporation are:

  • Partners have unlimited liability.
  • Every partner is liable to pay the debts incurred.

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