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Well it's mostly because partnerships are extremely flexible flow-through structures. If it were a corporate structure, there is corporate tax, so you have mor
by mrlala 6y ago
Well it's mostly because partnerships are extremely flexible flow-through structures.
If it were a corporate structure, there is corporate tax, so you have more of an incentive to spend as much as you can as opposed to tight spending and paying people as little as you can so you get as much profits as you can (partnership flows directly to the individuals, so there is no form of double taxation).
Also with a partnership you just rewrite your agreement which you keep 100% internally and do whatever you want. Corporate structure has a lot more overhead, you have requirements that should be met and so forth.
There are good reasons.. most of them the same old bs taking advantage of the system in one way or another.
- gamblor956 6y agoThey're partnerships because they're usually legally required to be partnerships as a matter of liability concerns. (Most countries now allow professional firms to be professional LPs, LLPs, or PCs, limiting the financial liability of partners for the debts of other partners but not those resulting from their own malpractice.)
- mdifrgechd 6y agoThis is how I understood it was well. Big four partnership structure is optimized to comply with the legal requirements for auditors. That is why e.g. accenture (which has no auditing arm) can be publicly traded but the rest cannot.