Which of the following is a disadvantage of a partnership?

• A. Partners have limited liability
• B. It's easy to transfer ownership
• C. Partners are jointly liable
• D. Partnerships have many tax advantages

Answer: (C)

The correct choice highlights a significant aspect of partnerships: partners are jointly liable for the debts and obligations of the business. This means that if the partnership faces legal action or incurs debt, each partner can be held responsible for the full amount, not just their share. This shared liability can create a risk for personal assets because creditors can pursue any partner's personal assets to satisfy business debts. This aspect of partnerships can deter some individuals from entering into such arrangements, as it exposes them to greater financial risk compared to structures like corporations, where liability is generally limited to the amount invested in the business.

The other aspects mentioned in the other choices illustrate characteristics that typically serve as advantages rather than disadvantages. For example, limited liability is not a feature of most partnerships, as general partners are personally liable for business debts. The transfer of ownership can be more complicated in partnerships, as it often requires the consent of all partners. Lastly, partnerships do offer various tax advantages, which can be favorable compared to other business structures where double taxation may occur. Thus, understanding that joint liability is a fundamental drawback of partnerships is critical for evaluating the risks associated with this business structure.