Many entrepreneurs choose to operate their businesses independently to maximize profits and make decisions without interference. However, doing so means taking on a significant amount of responsibility and liability. The debate between sole proprietorship and partnership businesses has been ongoing for some time, and it has gained renewed attention as entrepreneurship becomes increasingly popular. This article will examine the benefits of having a business partner and assess their impact on both entrepreneurs and businesses.
Advantages of Having a Business Partner
Cost sharing
Many entrepreneurs choose to operate their businesses independently to maximize profits and make decisions without interference. However, doing so means taking on a significant amount of responsibility and liability. The debate between sole proprietorship and partnership businesses has been ongoing for some time, and it has gained renewed attention as entrepreneurship becomes increasingly popular. This article will examine the benefits of having a business partner and assess their impact on both entrepreneurs and businesses.
Responsibility sharing
Often small businesses and entrepreneurs keep a small team to keep the costs low. But, a small team means that several responsibilities lie on one shoulder which can be stressful in the long-run. Having a business partner will allow the management and decision-making responsibilities to be shared among the partners. This will lower the burden on the entrepreneur. Also, employees and business processes need to be monitored for efficiency and effectiveness. The monitoring is not possible for one business owner as he has other personal and professional responsibilities as well. The business partners will share the responsibilities and take care of the work if one partner is not available.
Registration and tax benefits
A partnership has several legal benefits. Partnerships enjoy privileges with the Internal Revenue Service. The Internal Revenue Service treats a partnership as a pass-through entity and does not subject partnership to taxation. The business partners are taxed separately and the filling process is easier, with fewer formalities than a sole proprietorship. The business partners are taxed on the profits earned instead of the business. Also, partnerships do not have to pay high registration fees and save costs of the exorbitant legalities.
Skills and talent sharing
Different people have different expertise. Having a business partner means that two or more people with different experiences and expertise join heads to make the company a success. This creates a well-balanced pool of knowledge and skills coming from different minds. Although the balance may contract or complement, shall be productive for the company. For example, a business by two partners with expertise in marketing and sales, and finance will have an edge over a sole proprietorship with expertise in one the fields. A partnership has better opportunities for growth and expansion, as it takes calculated risks and makes smarter decisions with discussions and negotiations between the partners.
Motivation and support
Having a business partner means that two people who are committed to the vision of the company are willing to travel the extra mile for the project. However, an entrepreneur may lose hope and feel demotivated if the business is unable to make profits. He may make an impulsive decision during chaotic times such as downsizing or even closing the company. A business partner will keep the other motivated and hopeful with his constant support and guidance. When one is hopeless, the other will keep him pumped. Therefore, partnership enjoys an aura of enthusiasm and hope.
Having a business partner has several benefits for the company. It helps to share the costs and responsibilities and offers the wisdom and expertise of two or more people. However, the partners must be supportive, truthful, and committed to the company. Some situations may demand patience and forgiveness, and the partners must be willing to make the effort.
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