How to Start a Partnership
A partnership has both advantages and disadvantages when it comes to running a business. If you’re in the early stages of setting up a partnership, there are both legal and human considerations to keep in mind. Make sure things run smoothly for everybody involved by following these steps.
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Instructions
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Consider all the pros and cons of starting a partnership. Because this arrangement means dividing and delegating power to others, it may not work for everybody. On the other hand, a partnership can help you pull together both financial and intellectual resources to make a company stronger.
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Decide on the legalities, including the rights and obligations of every partner. The more people involved in the partnership, the more important the details are, especially if some partners are fully involved while others are silent or partial partners.
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Put everything in writing. Hire a lawyer to draw up a contract, and make sure everybody understands their place in the company before signing anything.
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Decide who will be in charge of signing documents and making large decisions. When something needs to be bought, employees have to be fired or contracts have to be signed, you need to agree in advance which partners will need to sign for the authorization to go through.
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Choose a business name for your partnership. When more than three people are involved, using last names can get confusing and hard to remember. By choosing a business name that represents the company, you are helping create an image that you can use in all documents.
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Register the name with the appropriate authorities. Depending on where you live, this may be your local chamber of commerce, city hall or Secretary of State. You may need to pay a small fee to check the name isn’t already registered and to process all necessary paperwork. You will be given exclusive use of the name after this. If you are required to file for permits or licenses for your company, you will need to register your name before you can attempt anything else.
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Tips & Warnings
Before you establish a partnership, find out what the tax implications are for the company and everybody involved. Partnerships usually reduce your personal tax benefits. this means you may end up without tax write offs in several key areas, such as health insurance.
Don't rush into a partnership. This is likely to be a lifelong commitment if you are lucky in the business world!
