Also, like a sole proprietorship, a partnership is not a taxable entity. The income is passed through to each of the partners who record individually their share of income, expenses, and losses. Partnerships are the appropriate structure for children who do not possess the skills or resources to handle all the major aspects of their businesses on their own. In addition, some young entrepreneurs see partnerships as a good way to get equity capital for their businesses. For example, by taking on a partner, a young entrepreneur might require that the partner put up half the money for the venture.
Partnerships can also present certain problems.
As in the case of the sole proprietorship, creditors of the partnership can go after the personal possessions of the general partners. In this situation, the partner with the most assets will lose the most. Also, the more partners in a partnership, the more bosses there are and, in turn, the longer it takes to get anything done and the greater the possibility of disputes. In deciding whether to operate as a sole proprietorship or as a partnership, young entrepreneurs should carefully consider what potential partners could contribute to the businesses. They should consider the values, work ethic, and prior work experience of any potential partners.