Starting business as a partnership may not be appropriate and necessary for all business activities for self employed persons and small business firms.

To better understand if this structure fits your business please review the following advantages and disadvantages:


  • More than one business owner, therefore more skills, experience, management expertise available.
  • Relatively low startup costs.
  • Partnership losses go to partners and can be offset against other personal income.
  • Privacy of affairs. Financial Statements don’t have to be released to the public and don’t have to be audited as with public companies.
  • Easy to change the business structure.
  • Can raise finance by introducing another partner.


  • All partners are jointly and severally liable for the debts of the partnership. This means that one partner is liable for debts another incurred on behalf of the partnership.
  • No protection for partner’s personal assets, which can be seized to satisfy partnership debts.
  • Lack of continuity. When a partner pulls out the business ceases.
  • Limitation on size.
  • Friction between partners.
  • Not easy to obtain finance as it is for companies. Banks often require personal guarantee and security over personal assets.
  • Often require professional advice to form. Advisable to have partnership agreement.
  • May be difficult to sell off the partnership business at a good price. It is often the case that a lot of success has been through personal effort and relationship with customers and partners.