It Takes Two (or Three, or Four): Effective Business Partnerships
Perhaps you don’t want to go it alone as with a sole proprietorship. That’s fine. Nothing to be ashamed of. As with all business structures, though, you may not want to be a sole proprietor for a specific reason: there’s more than one of you operating the business! Can you truthfully run a biz as a sole proprietor when there’s more than one of you? It’s not easy. You could very easily get into the realm of having to file for a corporation or LLC, because if your colleagues aren’t partnered with you, they’re most definitely employed by you. That defeats the whole purpose of the sole proprietorship, don’t you think?
Enter: All-Important Business Partnerships
This is your and your partner’s baby. You created it together. Knowing that, it’s important to consider that you just might want to focus on this endeavor being a business partnership, a type of formation typically filed and returned with the IRS every year. You can’t manage the taxes for generated revenue separately, after all; they have to be done jointly, like how a marriage can be done.
Oddly enough, though, business partnerships have no state filing requirements — it is encouraged, though, that both you and your partner draw up an actual contract agreement, dictating just how the business operates. This is important, actually, because between the two of you (or three, or four), you just might end up with disagreements, or dissolve, or liability. Even profits and losses would have to be determined.
Who should take the fall if there ever is a customer complaint? How does work get divvied up? Who does what? How much should each partner receive in revenue? These are all relevant questions to ask when considering business partnerships — and the type of business you’re considering — what your role would be, and what role your partner would have — just might provide the answers.
It’s All About the Legal Side of Things
That agreement’s necessary for obvious reasons. You never know if there’s going to be a disagreement of some kind. Get a contract in writing so that everyone’s on the same page. There will be no confusion. Many states also specify that individuals in business partnerships encompass full unlimited liability of debts, and that includes all actions of other parties within the entity. Nevertheless, you should get it all in writing, hence why it yet again is crucial that you consult with an attorney to make sure you’re watching all your P’s and Q’s.
What do you think? You think business partnerships might be the way to go? Discuss amongst yourselves!
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