When all partners sign debt instruments, the borrowing capacity of a partnership may be greater than the total borrowing capacity of the partners as individuals. For any given level of complexity and size of operation, the cost of establishing a partnership is relatively low and record keeping needs are relatively easily satisfied. Record-keeping and income tax filing requirements are only slightly more onerous than for individuals. Opportunities for family members to work together in starting or operating a business are relatively unlimited. Any partner in a general partnership and the general partner of a limited partnership can enter into contracts and incur obligations that are binding on all partners.
Any general partner can require dissolution of the partnership at any time.
Partners holding a minority interest can be alienated if general partners holding a majority of the ownership interest consistently vote as a block and the interests of minority partners are ignored. Division of management responsibility among the partners can result in no one having an overall understanding of the financial standing of the partnership. For a number of social and economic reasons, it may be difficult to enter an existing partnership. Conflicts or disagreements among the partners can immobilize business decision making causing loss of productivity and profitability. A carefully drafted partnership agreement can reduce or avoid many of these limitations.