Forming a Business Partnership
Forming a business partnership is one of the most exciting and important aspects of starting your own business. There are many pros and cons to such a partnership, but if handled right can be very rewarding and provide an invaluable resource for your business. The process is usually easy once you have decided on the core values of the business that you want to incorporate. Here’s a short list of questions to ask yourself as you consider the feasibility of any long term partnership:
Mission Statement: What is your business about? Is there a niche market that you are uniquely qualified to fill? Does your potential partner have complementary skills that you can bring to the table? If you have decided on a core value and a mission statement for your new partnership, these questions will help flesh out your partnership agreement.
Equity Exchange Liability Protection: Will our prospective partners provide regular, reliable dividends? This is critical because it limits or eliminates the need for dilution of equity into the company. Dividends should be used only as an absolute last resort. In a strategic business partnership, it is usually advantageous to keep equity costs low so the company’s profits stay high.
Limited Liability Company: Is one partner (LP) capable of sustaining and building the other partner’s business? A limited liability corporation is beneficial because it limits personal liability and allows joint and several liability coverage on a consolidated basis. However, one partner can’t maintain the capital investments of the other partner. Also, one partner can’t hold the shares or the ownership rights of the other partner. A limited liability company should be established with careful planning and structuring. These auctions, via sites such as Boat Parts are also available online.
How to Form a Business Partnership – Forming a business partnership requires careful planning and the engagement of a qualified attorney. You want to include all of the following conditions: alignment of interests, a written agreement, and registration of the partnership. One of the easiest ways of creating this agreement is by using an automatic teller machine (ATM). Also, if you do not have an existing partnership, it is wise to consult with a lawyer to make sure the formation of a new partnership is within the bounds of applicable law. If the new partnership is going to be a C corporation or a partnership, the formation will also require approval from the Secretary of State.
Forming partnerships is simple but not easy. In order for you and your partners to benefit from the results of your efforts, it is essential that you carefully plan your formation and follow the guidance of an experienced business attorney. When forming a partnership, it is important to understand your partner’s and the commitments that each one has to his or her own business. Forming a long-term business partnership is slightly different than forming a general partnership. Long-term partnerships require the engagement of additional funds by the partners and, in many cases, additional personal assets as security for the partnership’s debt.