There's an old joke about a man who was telling a friend about an opportunity he was taking to form a partnership with another person. He told them that he brought the partnership experience, while his partnership brought money. When asked what advantages such an agreement brought, the man replied, "In a few years, I will have the money and my partner will have the experience."
It's a funny joke to be sure, but one that comes with good lessons. First of all, starting a partnership with another person can bring with it distinct advantages. These might include the following and more:
There are also distinct disadvantages to forming a partnership. Unfortunately, if actions by one partner causes the business harm, both partners suffer, regardless of how either partner felt about the action. It is also common for partners to disagree over the course of a business operations, and one partner pushing another partner out of the relationship. This most often occurs when there are no written agreements in the formation of a partnership.
In some cases, the terms of partnerships evolve as the business progresses in time. This allows the business relationship between the partners to change as the business changes or the partners grow and change their life situations. The terms in these agreements can be as easy or as difficult to change as the partners agree to.
A partnership business is usually very easy to form, depending largely on the state in which the business is created. Forms for creating a partnership is available at FindLegalForms.com
It's a funny joke to be sure, but one that comes with good lessons. First of all, starting a partnership with another person can bring with it distinct advantages. These might include the following and more:
- Just as you might bring certain assets such as money, talent, and others, so will a good partner. This kind of partnership is the best of both worlds.
- Split time. With a partner, you can take time off without having a person in charge who has no financial interest in your company. All partners have a stake in the business.
- The amount of money that can be made available with the inclusion of a partner can be dramatically more, depending on the agreement between them.
- Shared assumption of debts by the partnership. All debts that are incurred by a partnership in the course of business are shared by the partners.
- Taxes are paid by all partners, and the percentage of the amount to be paid is split to the extent that the business interest is divided.
There are also distinct disadvantages to forming a partnership. Unfortunately, if actions by one partner causes the business harm, both partners suffer, regardless of how either partner felt about the action. It is also common for partners to disagree over the course of a business operations, and one partner pushing another partner out of the relationship. This most often occurs when there are no written agreements in the formation of a partnership.
In some cases, the terms of partnerships evolve as the business progresses in time. This allows the business relationship between the partners to change as the business changes or the partners grow and change their life situations. The terms in these agreements can be as easy or as difficult to change as the partners agree to.
- How the business will be financed? Will each partner contribute equally, or with differing amounts of capital, labor, talent, and other interests.
- Who will do what work? For example, one partner might contribute specialized expertise while another contributes general management skills. Everything depends on the agreement that is formed between the partners.
- What happens if a partner dies? If a partner dies, does this dissolve the partnership or will ownership of that partner pass to his his survivors?
- What happens if one or both partners want to dissolve the partnership? A partnership usually dissolves when one or more partner decides to leave or otherwise breaks the terms of the partnership.
A partnership business is usually very easy to form, depending largely on the state in which the business is created. Forms for creating a partnership is available at FindLegalForms.com
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