characteristics, advatanges and disadvantages

• Advantages of a Partnership:

  • Easy and inexpensive to form and dissolve
  • Greater amount of capital may be raised compared to a sole proprietorship
  • Relative freedom and flexibility in decision-making compared to a corporation
  • Better managed
  • Unlimited liability of general partners
• Disadvantages of a Partnership:

  • Lack of business continuity
  • Limited amount of capital
  • Unlimited liability of a partnership deters many from joining
  • General partner may be subjected to personal liability
  • Likelihood of dissension and disagreement
  • Difficulty in transferring ownership
• partnership is formed through the mutual agreement of all the partners. The contract may be written or oral.

  Based on contract
• no one should be forced or coerced in joining a partnership.

  Voluntary association
• any partner may act as an agent of the partnership in conducting its affairs.

  Mutual agency
• a partnership may be dissolved at any time by action of the partners or by operation of law. The withdrawal, death, retirement, bankruptcy, incapacity of a partner and the admission of a new partner dissolves the partnership. Incorporation of a partnership will also result to the dissolution of the partnership.

  Limited life
• the personal assets of a general partner may be used to satisfy the claims of the creditors of the partnership if the partnership assets are not enough to settle the liabilities to outsiders upon liquidation.

  Unlimited liability
• properties contributed to the partnership are owned by the partnership. Properties invested by a partner cease to be his own personal property.

  Co-ownership of property
• a partner has the fight to shat do partnership profits. The partners are entitled to share invested profits as a return on their investment.

  Co-ownership of profit
• a partnership has a legal personality separate and distinct from that of each of the partners.

  Legal entity
• partnerships are subject to income tax rate of 20% or
25% rate beginning the fiscal year 2021 except for general professional partnerships (i.e., those partnerships organized for the exercise of professions, e.g., CPAs, doctors, lawyers, etc.). 20% will apply if total assets (excluding land where property, building, and equipment are situated in) do not exceed 100 million pesos and taxable income does not exceed 5 million pesos. These two requirements must be both met. Otherwise, the 25% tax rate will apply


  Income tax