There are many advantages to entering a business partnership. For example, entering a business partnership provides an opportunity to combine resources with another individual who may possess skills that you lack, and vice versa. In other words, a business partnership allows one or more people to combine their knowledge, skills, and resources to improve a business’s odds of success. However, before entering a business partnership, there are several things you should consider. In this article, we examine things to address before entering a business partnership.
Make Sure You’re on the Same Page
One of the key elements of a successful business partnership is shared values. Of course, this doesn’t mean you and your partners must agree on everything. What it does mean, however, is that by ensuring you are on the same page before entering the partnership, you can avoid a lot of disagreements down the road.
Set Clear Expectations
A lot of work and money goes into running a business. Therefore, it’s important to clearly outline what is expected from all partners from the start. For example, it may be useful to create a job description for each partner. In addition, you should outline what each partner will contribute in terms of finances, time, and responsibility.
Determine How You’ll Manage Finances
Every business has one primary goal: make a profit. Therefore, you should determine how you and your partner plan to manage your business’s finances. Financial issues to consider include:
- Whether both partners will contribute funds toward growing the business
- Whether the business will take on debt
- How the business will manage finances moving forward
- Whether the partners will take a salary or focus on reinvesting all profits into the business
Determine Your Business Structure
Next, you must choose a legal business structure. Below are descriptions of the three primary types of partnerships:
General partnership: A general partnership is relatively easy to establish. With a general partnership, you don’t have to file documents with the state, and you aren’t required to pay any fees. However, a general partnership provides minimal liability protection to the partners.
Limited partnership: A limited partnership provides at least one partner with unlimited liability. The other partner’s liability is limited, which means that his or her personal assets can’t be tied to the business. People usually choose this type of partnership when both of the partners have different levels of responsibility and involvement in the business.
Limited liability partnership: Finally, a limited liability partnership limits each partners’ financial responsibility to the business. This type of legal structure provides maximum protection to all partners.
Contact a Florida Corporate and Business Law Attorney
In addition to the things discussed above, there are several other steps involved in forming a partnership. Therefore, before entering a business partnership, you should seek the guidance of an experienced attorney. At Gueronniere, P.A., we provide guidance and representation to businesses throughout Florida. Founded by lawyer Grace de la Gueronniere, we have the experience, knowledge, and resources necessary to fulfill your corporate and business law needs. Please contact us today to schedule a free initial consultation.