Mark Giltrow and Denise Chan are forming a business to imprint T-shirts. Giltrow suggests that they organize as a partnership in order to avoid the unlimited liability of a proprietorship. According to Giltrow, partnerships are not very risky.

Giltrow explains to Chan that if the business does not succeed, each partner can withdraw from the business, taking the same assets that she or he invested at its beginning. Giltrow states that the main disadvantage of the partnership form of organization is double taxation: First, the partnership pays a business income tax; second, each partner also pays a personal income tax on her or his share of the business's profits.

Correct the errors in Giltrow's explanation.

1. A partner has

personal liability for the obligations of the partnership. Therefore partnerships are

not risky

risky

for a partner.2. A partner

can

cannot

take from the business the same assets that he or she invested at the beginning. 3. Partnerships

don't pay

pay

business income tax.