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Is a partnership right for your business?

On Behalf of | Jul 29, 2020 | Business Law |

If you’re thinking about starting a business, then you’ve probably got a lot on your mind, especially given the current state of the country. You might have concerns about securing the capital you need to secure a location and hire personnel, and you might worry about negotiating contracts that ensure that your business interests are protected without fear of breach. Before you get to that point, though, you need to settle on a business structure that best suits your needs.

You have a lot of options at your disposal, but one of the more commonly utilized business structures is the partnership. So, let’s take a quick look at it.

Partnership: An overview

In short, a partnership is an agreement between two or more parties to go into business together. Generally speaking, partners share the profits of the company, but they also share the liabilities. The allocation of profits and liability are usually spelled out in a partnership agreement so that the parties know exactly what they are getting into before moving forward.

There are a few benefits to one of the various types of partnerships available to you. One of the biggest is that individuals who are in a partnership may receive tax benefits considering that their profits are not double-taxed like they would be if they flowed through a corporation. A partnership can also help ensure that you and your partners retain control over the operations of the business and can easily make important decisions.

As with every business structure, there are drawbacks to a partnership. Liability is usually the biggest. While you can enter into a limited liability partnership whereby a lawsuit filed against one partner will not affect the other, the truth of the matter is that partners are personally liable for all debts. So, if a judgment is issued against the partnership or a debt goes unpaid, then creditors can come after your own personal assets.

Making the right choice

Although there are only a handful of business structure categories, within each of them there are many sub-types. Therefore, it’s highly likely that there’s a business structure that is just right for you. If you want to discuss your options and obtain help creating a business structure and plan that promotes your best interests, then it might be time to sit down with an experienced business law professional.