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What is a disadvantage of a partnership?

Practice Questions

Q1
What is a disadvantage of a partnership?
  1. Limited access to capital
  2. Shared profits
  3. Complex formation process
  4. Unlimited liability

Questions & Step-by-Step Solutions

What is a disadvantage of a partnership?
  • Step 1: Understand what a partnership is. A partnership is a business structure where two or more people share ownership.
  • Step 2: Know that in a partnership, all partners contribute to the business and share its profits.
  • Step 3: Recognize that sharing profits means each partner gets a smaller portion of the total earnings.
  • Step 4: Consider that this sharing can be seen as a disadvantage because partners may feel they are not getting enough money for their work.
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