The challenges involved in partnerships include: (1) liability being confined to the owners or partners; (2) the efforts of forming the business are also solely shouldered by the partners; and (3) any problems in decision making should be resolved by the partners; where it is challenging when both partners have opposing beliefs.
On the contrary, the advantages of partnerships include: (1) fairly easy, simple and less costly to establish and operate, when compared to corporations; (2) any urgent issues or concerns regarding running and operating the business could immediately be resolved by the partners; and (3) there are greater potentials for generating profits since only the identified partners, who forged an agreement as to the allocation and distribution of the profits (of losses) are to be accounted for.
An example of a partnership could be an ordinary citizen, Mr. A and another citizen, Mr. B, who had been college friends and who plan to set up a restaurant business within their local community. Within the partnership, they could stipulate contributing money, skills, and resources on a 50-50 basis or divided equally; and therefore, profit would also be divided equally between them. Other examples of partnerships could be school business partnerships where small business organizations could partner with schools with the objective of serving the unique and distinct academic needs of the students.
IRS. (2013, June 27). Partnerships. Retrieved from irs.gov: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Partnerships