If you’re thinking about starting a business, then you have a lot of important decisions ahead of you. You’ll need to obtain space to carry out your business, develop marketing strategies, and secure supply lines that keep up with demand. But before you get to hiring talent and building customer relations, you need to figure out how to form your business, which includes deciding which business structure best suits your needs. This week, let’s briefly look at the partnership.
The benefits of a partnership
There are many types of partnerships, but partnerships have significant benefits. Generally speaking, two or more parties who share in the business’s profits and liabilities run a partnership under agreement. Perhaps the biggest benefit of a partnership is that it isn’t double-taxed like a corporation. This is because the partnership doesn’t pay income tax. Instead, the individual partners pay income tax on profits received from the partnership. This can lead to significant savings. Another advantage to a partnership is that owners of the business, the partners, often have more control over the business than, say, those who own a corporation.
The disadvantages of a partnership
The biggest drawback of a partnership is that partners are personally liable for the business’s debts. This can be significant, especially if you’re a professional who may be subjected to lawsuits of some sort. There are legal options to limit liability, such as by creating a limited liability partnership, which can protect some partners from liabilities if another partner is subjected to a judgment. Again, this type of partnership is especially favorable to those who are professionals.
Be fully informed before making a decision
There are a lot of business structure options at your disposal. You need to choose the want that is right for you so that you can maximize profits, minimize risks, and drive your business towards its intended goal. To ensure that your business starts off on the right foot, you might want to discuss your circumstances with an attorney who is experienced with business formation and planning.