What are the advantages of forming a business partnership over a sole proprietorship? (multiple choice) a. Partners in business generally get along very well.b. If the business fails, the partners normally share responsibility for the loss rather than assigning it to one person.c. One partner can work on one component of the business, while the other partner can work on another.d. Partnerships are relatively easy to start up

Answered: What are the advantages of forming a…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter10: Financing And Producing Goods

Section: Chapter Questions

Problem 21AA

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What are the advantages of forming a business partnership over a sole proprietorship? (multiple choice)

a.	Partners in business generally get along very well.
b.	If the business fails, the partners normally share responsibility for the loss rather than assigning it to one person.
c.	One partner can work on one component of the business, while the other partner can work on another.
d.	Partnerships are relatively easy to start up

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Expert Solution

Step 1-advantages of forming a business partnership

The term sole proprietorship refers to the type of business owned and managed by a single person only.

But a business partnership means the type of business owned and managed by more than 1 persons.

The advantages of forming a business partnership are as follows:-

unlike starting a company which requires a lot of procedures for it to begin, a business partnership does not requires any complex procedures rather it is easy to start and also there is no need for any compliance of any law to be formed.
In sole proprietorship there is always a risk that any decision might lead to any negative scenario of the company, which is not in the case of business partnership, where more than one partners are always taking the decision thus many minds are better than only one mind.
One of the most important result of this business partnership is that the cost of daily expenses is not borne by a single person but by more than one partners.
since more than one person are involved in business partnership, there is always a favourable opportunity of shared qualities. Since more than one person is involved in business partnership, so more than one skill is involved here and thus the business partnership can highly take benefit of this skill.
the most important aspect of business partnership is division of workload, unlike sole proprietorship where only one person does all the work or take the responsibility of all work.

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