Starting a Business Partnership
--The Basics

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Are you interested in starting a business partnership? Parterships have the advantage in that they are very simple to organize…but also the disadvantage that, due to the informal nature of this business form, you are at risk for more personal liability than other business types.

What is a partnership?

A partnership is legally similar to a sole proprietorship, except at there are at least two owners. It is also commonly referred to as a “general partnership.” Partners are personally liable for the obligations of the partnership. Also, management is not centralized but is spread among the partners. Further, ownership interests of the partners cannot be transferred without the consent of other partners, and a partnership does not continue beyond lives of owners without a prior agreement to allow remaining partners to continue. For tax purposes, profits and losses flow through directly to partners.

How do I start a business partnership?

There is usually little formality required to form a partnership, except there must be the intention by all partners to form a business as co-owners, for profit. Further, in many states, you merely have to file a certificate of co-partnership in the counties that the business will operate in.

Advantages:

• spread risk among partners
• easy to form and very few formalities to follow on an ongoing basis
• avoid double taxation

• share management rights with co-owners
• risk personal assets

Although the information here is generally accurate, it is important to note that every state has different requirements for businessformation of any business type-sole proprietor, partnerships, corporations and LLC’s. Consult with your state’s laws or an attorney to ensure that you are following the proper procedures for starting a business partnership.

Creating Strategic Business Partnerships-- Learn more Here! Starting a Business Partnership – Learn about Limited Partnerships

Click to learn about Limited Liability Partnerships

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