Which of the following is not an advantage of operating a business as a partnership?Multiple choice question.Easy formationLimited liability of partnersPartners can deduct business losses from their taxable income.Single taxation of profits
Question
Which of the following is not an advantage of operating a business as a partnership?Multiple choice question.Easy formationLimited liability of partnersPartners can deduct business losses from their taxable income.Single taxation of profits
Solution
The correct answer is "Limited liability of partners". This is not an advantage of operating a business as a partnership. In a general partnership, partners are personally liable for the business's debts and liabilities. This means that if the business cannot pay its debts, the partners' personal assets may be used to satisfy those debts. This is in contrast to corporations, where shareholders have limited liability and are only responsible for the business's debts up to the amount of their investment.
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