4 Reasons when Partnership is More Beneficial than Sole Proprietorship for Young Professionals in Quebec
Thinking of launching a sole proprietorship in Quebec? As a young professional intent on entrepreneurism, this seems like a natural place to start. Partnership may also be worth considering, however, as it offers many of the same benefits while mitigating risk.
Sole Proprietorship Versus Partnership for Young Professionals in Quebec
The simplest business structure, sole proprietorship refers to any business with just one owner. This person is responsible for all debt, but also receives all income. Partnerships involve two or more owners, who divide assets, debts, and liabilities.
No structure is inherently better than another; some entrepreneurs are better suited to sole proprietorship, while others prefer partnership. However, sole proprietors face unique financial and operational challenges that partners can easily sidestep.
Here are the 4 benefits of launching a partnership instead of a sole proprietorship for young professionals in Quebec:
1. Partners Complement One Another with Specific Skill Sets
As sole proprietor, you may suffer a steep learning curve. In addition to mastering your business niche, be prepared to acquire marketing, sales, administrative, and technical skills. Nobody can expect instant proficiency in any of these areas. While outsourcing may be possible, limited funds often force you to handle tasks for which you’re ill-suited.
Partnerships allow entrepreneurs to make the most of their natural abilities and expertise. Partners with complimentary skill sets can fill in the gaps that would otherwise exist in a sole proprietorship. For example: one partner may take over technical concerns while the other focuses on day-to-day business operations.
2. Reducing Individual Risk
In a sole proprietorship, all risk falls on a single individual. With partnerships, owners invest assets and allocate liabilities as they see fit. While both partners are liable for each others’ actions, they can divide debts and judgments instead of forcing one person to shoulder the burden alone.
3. Finding Time to Test the Waters
As a young professional and aspiring entrepreneur, you’re intimately familiar with the phrase ‘don’t quit your day job.’ Building a business takes considerable time, particularly for a sole proprietor intent on going it alone. Unfortunately, it also takes time to turn a profit. Meanwhile, you need to pay the bills. If you’re like most young entrepreneurs, you’ll need an additional source of income: a traditional, full-time job.
It’s not easy to juggle a demanding job with a business of your own. With a partner, however, you can split the workload as you test the waters. You’ll be freed up to network with other young professionals as you ascend the career ladder.
4. Splitting Overhead and the Cost of Operation
Another familiar cliche for new entrepreneurs: spending money to make money. From business premises to filing fees, overhead costs can be considerable. Not only do partnerships allow entrepreneurs to divide upfront costs, this structure provides a greater pool of knowledge and contacts, and therefore, expanded opportunities for pursuing capital. Partners can also divide ongoing expenses that might run a sole proprietor dry.
No one business structure works in all contexts. As an aspiring entrepreneur, it’s critical that you understand the implications of each approach. Think carefully about the risks and rewards of sole proprietorship before you go it alone.