Starting a business with a partner does seem like a great idea, and it is one until every person is on the same page. There have been success stories of partnership businesses too. However, you need to consider various factors to reach there.
Of course, starting a new venture with your long time friend or a close relative gives you enough kick and motivation you need. But, take a step back and look at the bigger picture. This article will help you understand different perspectives you need to consider before investing any time, money and energy.
The Why’s of beginning a business
Regardless of the kind, you are starting a business! The first question you need to ask yourself is why? Why do you intend to create a firm with a partner? Why do you need a partnership model to run the business? Without considering the opposite person, you first need to think for yourself.
Thinking more about the partnership aspects than assuming the benefits this said person will offer gives you an objective perspective. If you feel that starting along with another person calms your fears, then it won’t go down well in the future.
Choose the right partnership.
While getting into the business, both the partners need to decide the kind of partnership they wish to get into. There are three most common partnerships you’d find,
- General partnership
- Limited partnership
- Limited liability partnership
Each of them signifies one thing and assures a safety net for at least one of them. A general partnership involves both parties running the business, with a risk of losing personal assets when faced with a loss. The limited partnership would mean that only one will have to face such risk while the other’s liability can’t tie to their personal assets.
The third is the most preferred one, where both the partners aren’t liable for their personal belonging during loss or bankruptcy. The first kind doesn’t need any filling, but the other two require an official filing.
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The legal things
Getting an attorney into the picture after deciding on the partnership is extremely crucial. Because while drafting the agreement, you will learn how the business should be handled, managed and dissolved. It also gives enough understanding of the powers each person holds.
There is no rush to confirm the first draft and sign it. Learn each other’s responsibilities & rights to comprehend if you both stay on the same page. It is definitely a tedious step but worth it in the long run. The sudden shift in the management should not affect, and a procedure should exist to follow any changes in the business.
Running a business is equivalent to maintaining a marriage. There will be ups & downs, agreements & arguments – It is you who need to choose wisely on which battle to fight! When there is clear communication and understanding, it reflects in the business when it flourishes!