What is the primary disadvantage of a general partnership?
Practice Questions
1 question
Q1
What is the primary disadvantage of a general partnership?
Limited access to capital
Unlimited personal liability for partners
Difficulty in decision-making
Lack of business continuity
The primary disadvantage of a general partnership is that partners have unlimited personal liability for business debts.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the primary disadvantage of a general partnership?
Solution: The primary disadvantage of a general partnership is that partners have unlimited personal liability for business debts.
Steps: 4
Step 1: Understand what a general partnership is. It is a business structure where two or more people share ownership and management.
Step 2: Recognize that in a general partnership, all partners are responsible for the business's debts.
Step 3: Learn about unlimited personal liability. This means that if the business owes money, creditors can go after the personal assets of the partners, like their homes or savings.
Step 4: Realize that this is a major risk for partners because they could lose their personal belongings if the business fails.
