business

advantages

disadvantages

you’re the boss

you keep all the profits

start-up costs are low

establishing and operating your business is simple

you have maximum privacy

it’s easy to change your legal structure later if circumstances change you can easily wind up your business

you have unlimited liability for debts as there’s no legal distinction between private and business assets

your capacity to raise capital is limited

all the responsibility for making day-to-day business decisions is yours

it can be hard to take holidays

you’re taxed as a single person the life of the business is limited

partnership

advantages

partnership

disadvantages

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two heads (or more) are better than one

your business is easy to establish and start-up costs are low

more capital is available for the business

you’ll have greater borrowing capacity

high-calibre employees can be made partners

there is opportunity for income splitting, an advantage of particular importance due to resultant tax savings

partners’ business affairs are private

there is limited external regulation

it’s easy to change your legal structure later if circumstances change

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the liability of the partners for the debts of the business is unlimited

each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts

there is a risk of disagreements and friction among partners and management

each partner is an agent of the partnership and is liable for actions by other partners

if partners join or leave, you will probably have to value all the partnership assets and this can be costly.

plc

advantages

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the business has the ability to raise additional finance through share capital.

the shareholders have limited liability.

increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve economies of scale

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disadvantages

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the business has the ability to raise additional finance through share capital.

the shareholders have limited liability.

increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve economies of scale

click to edit