Accounting › Section N · Partnership accounting › Topic N.1
Partnerships: pros, cons, and formation
Many accounting firms, law practices and family businesses are owned by partners rather than shareholders. Before you can allocate a partnership's profits, you need to know what the form offers, what it risks, and how each partner's starting stake is recorded.
In this topic
- Two or more owners, one business
- What makes a partnership different
- Taxes flow through to the partners
- Advantages of the partnership form
- Disadvantages of the partnership form
- General, limited, and limited liability partnerships
- The partnership agreement
- Recording each partner's contribution
- Worked example: cash, equipment and a note
- Worked example: receivables and inventory
- Common mistakes to avoid
- Key takeaways
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