Business Partnerships

A Look At Business Partnerships



Business partnerships are started every day by literally
thousands of small/home based business owners.

Before signing their name on the dotted line and agreeing
to the partnership, the parties involved should
discuss the pro's and con's connected
with the business venture.

What is a partnership?

According to the Small Business Administration (SBA)"a
partnership is an association of two or more people as
co-owners of a business for profit."


Experts recommend the members of the partnership
sign an agreement which shows their
obligations to the business.

Business partner roles should always be shown in
the contract. Division of profit shares for each member
should also be entered in the contract. One section of the contract
should show steps to end the partnership.

Note: Limited partnerships are started by co-owners who
contract to risk an agreed upon investment in the business.

All members involved in the partnership should hire an
experienced contract lawyer to handle legal matter.s This step
will protect all partners involed in the business.


Advantages

A partnership is easier to start than a corporation.

Partnership are easier to deal with than corporation although
less flexible than a proprietorship.

The partnership pays no federal or state taxes.
The profits obtained from the business go directly to the
partners.

Partnerships, like proprietorships, pay no state or
federal tax. Although, partners are required to pay personal tax on all
business profits.

Startup Money- is easier to obtain for a partnership
than a sole proprietorship because two or more owners are able to invest
money in the venture.

The skills and experience of all partners are combined to handle
decisions.


Disadvantages


If one partner wishes to end the business the
partnership will terminate. Buy out issues might arise. This is
one reason why buy out issues should be covered in a written
contract before entering into the partnership.

Partnerships have to jump through many hoops to obtain the
financing they require while corporations find an easier
road to travel when seeking financing.

Note that each partner is liable for the business debts incurred
by other business partners. So if one business partner makes a very
costly business decision the other partners will also
be liable for the debt.


A blending of experiences and skills is one unique advantage
of a good partnership. A clear advantage over a
sole proprietorship where limited skills/experience might
limit success. Although the Partnership might sound good
on the surface you should choose business partners carefully.



BB Lee (C)2007