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Wednesday, December 1, 2021

Thinking about Entering into a Limited Partnership? Here Are the Pros and Cons

A limited partnership can be advantageous for your business. At the same time, it could have some drawbacks, and you should look at both sides of the equation before entering into this kind of business deal.

Let’s take a look at the pros and cons of the limited partnership to help give you a clear, full assessment before you start jumping in feet first.

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Pro- The limited partnership means two brains are working together

With a limited partnership, two entities will be teaming up or two individuals will be forming a cooperative entity. This can be very beneficial, as two skill sets will be working in conjunction. All those years of experience will come together as though they are added up into one. That’s definitely advantageous for any business. With two partners, you get twice the set of skills, twice the potential years of experience, and twice the potential for success.

Con – It could be an unequal partnership

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The biggest drawback that needs to be considered when trying to register a limited partnership or จดทะเบียนห้างหุ้นส่วนจำกัด is that the two entities may not be bringing the same amount of resources, expertise, and skill to the table. One side of the team could be doing a lot more work, could have more years of experience, and could be the one responsible for any success. That means they could be pulling the other along. This kind of unequal partnership is actually very common, and it’s something you want to watch out for. Make sure you know your partner before entering into this business transaction.

Pro – You can catch errors more easily

When you’re working with a partner, the two of you can watch each other’s errors. You will be watching one another’s back so that mistakes don’t make their way through as easily. It’s like having an editor all the time, and that’s very useful for when you’re balancing the books, making purchasing decisions, making business deals, and determining how to help the business grow. There are mistakes you might overlook because of your personality or how close you are to the problem. With a partner at your side, you get a different perspective that helps you spot errors before they become policy.

Con – Everything takes two

So, one of the big issues you may run into with a limited partnership is the fact that just about every business decision will require both of you. If your schedules don’t line up, if one of you is very busy, or both of you don’t agree, it can keep the business from moving forward. It might be difficult at times to make business decisions that rely on both of you when you’re not both in agreement. That’s why you want to find a partner who is on the same page with you business-wise. You should both have the same goals, but you should also be willing to compromise, negotiate, and work together for the good of the business.

Pro- You have extra capital work with

Since there are two of you, that’s two resource pools you can draw from. What you cannot do on your own, you may be able to do with a partner. What you couldn’t afford yourself, you may be able to buy easily when someone else pitches in to help. A business is just starting out will need some capital to draw on, and when two partners are working together, that can create quite a strong foundation of capital to work from.

Con- You may go separate ways

Even though you may start out the business with the same ideas and on the same path, your goals could diverge later on. The two of you may not agree at some point, and that can cause all sorts of problems for the business. It’s not just scheduling problems at that point, but it could be irreconcilable differences that bring the whole business crashing down. This could lead to a breach in the agreement where the two of you have to actually part ways and split the business or leave the business in the hand of one of the partners. This can be devastating for a company.

 

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