Identify the Pros and Cons of the Partnership as a Form of Ownership

Identify the pros and cons of the partnership as a form of ownership.

A general partnership is one of the more common and easy types of business formations. General partnerships can have any number of partners, but usually have only a few partners. The general partnership is formed when two or more individuals voluntarily agree to start a business with the goal of turning a profit. The advantages of starting a business partnership are:

* ability to pool resources;

* ability to share responsibilities and capitalize on contemporary skills;

* ease of formation; and

* possible tax advantages (Kelly).

In contrast, the main disadvantages of partnerships are:

* unlimited liability;

* potential for disagreements;

* lack of continuity; and

* difficulty in withdrawing from a partnership (Kelly).

If done correctly and for the right reasons, partnerships can prove to be a very lucrative and stable business entity.

Obtaining necessary capital to start a business is one of the main obstacles in starting a business. By allowing a number of individuals the ability to pool financial resources, partnerships offer a great way to overcome financial challenges. Similarly, partners also share the responsibility and their respective skill-sets in running the business. Partnerships also are one of the easiest to form of all business entities. Although they can be started with just a handshake, most involve a simple legal agreement that focuses on financial contributions, the share of responsibilities and profit, how disagreements will be settled, and how to deal with the withdrawal of a partner (Kelly). Finally, partnerships have the tax advantage of income be taxed as personal income and not double-taxed as with other types of corporations.

Although there are many advantages to general partnerships, there are also significant disadvantages that should be considered. One of the main disadvantages is that partnerships have unlimited liability, meaning if the company goes out of business the partners' personal assets are at risk to satisfy debts. Partnerships are much like marriages in that disagreements, if left unresolved, can cause problems in the business and possible dissolution of the partnership. If a partner decides to leave the partnership, it may be difficult to do so and completely sever liability for debts and obligations of the firm. Another disadvantage is brining in a new partner. If the dynamic of the partnership changes or if the existing partners cannot agree on bringing in the new partner, it could be detrimental to the firm and possibly dissolve the partnership.

Discuss funding options for small businesses.

There are a wide variety of funding options for small businesses. Among the most common are: personal resources, debt financing, grants, and equity financing..angel investors, friends and family, venture capitalists, and strategic investors (Start Up Nation). An individual's own financial resources might be the easiest to utilize with the fewest strings attached, but the risk is that these savings could be completely lost if the business is not successful. Debt financing can be accomplished through credit cards or small business loans. This can provide a small business owner with access to larger sources of capital, but they bring the added risk of using personal or business assets as collateral and the requirement to pay interest. Grants are funds provided by government entities that don't need to be paid back. While certainly this source of funding is preferred, it is very limited. The last source of funding. equity financing, involves ceding a piece of ownership in the business in exchange for capital. This source of funding can come from family and friends, venture capitalists, angel investors, or other strategic investors. While this form of financing doesn't have to be paid back in the traditional sense, one needs to consider the implications of losing a portion of ownership in the company to an outside entity and the possibility of outside influences on business decisions.

Determine and discuss how managerial accounting can help managers with product costing, incremental analysis, and budgeting.

Unlike financial accounting, managerial accounting is concerned with providing information to managers inside an organization so that they can make effective, knowledgeable decisions and understand the financial impacts of those decisions. There are three main areas where managerial accountants can help an organization's managers: product costing, incremental analysis, and budgeting. Product costing involves setting the selling prices of goods and services as well as those used in inventory valuation and income determination. Managerial accountants are able provide managers with detailed product costing information so that managers will know how much it costs to produce a good, what it's