There are some considerable advantages to be gained by setting up a business partnership. However, partnerships can also be very difficult to sustain, and that means it’s usually hard for the partners to maintain an arrangement which is rewarding, fair, and efficient. Here’s the best way to structure a business partnership, so that all parties involved receive long-term benefits.
Limited vs General
There are two main kinds of partnerships, those being general and limited. In a general partnership, two or more individuals will have an agreement to work together for profit. Each of the partners is liable for any debts accrued by the partnership, and they’re also responsible for any debts accrued by other partners on behalf of the business.
A limited partnership is a variation on this model, and it includes one general partner and at least one limited partner. The reason it’s considered limited is that the limited partner has only a certain amount of personal liability. The degree of exposure for anyone involved in this type of partnership is basically limited to that partner’s overall investment in the business agreement.
Structuring your Partnership
Before you can begin business operations under your new partnership arrangement, there are several details you will have to account for. First of all, you will need to obtain a federal employer identification number (EIN). Then you will need to obtain the appropriate permits and licenses, which will depend on the kind of business you have, and the partnership you have set up. You will also need to decide on an official address from which a business will be conducted.
This has become more important recently, since many partners actually work from remote locations, so what you’ll need to do is designate one place where business mail can be sent. Then you’ll need to obtain insurance for each of the partners’ personal assets, so they won’t be exposed to any creditors associated with the partnership. By obtaining insurance, you can provide at least some level of protection against asset seizure and financial loss.
Do You Need Funding to Get Your Small Business Established?
Startups frequently have difficulty securing the funding necessary to get established. We may be able to assist your small business in this area, so contact us at Hornet Capital Solutions at your convenience.