A business partnership is defined as any venture or trade involving two or more people working together. Partnerships can be an excellent way to connect talented people and reward them with business ownership and profit, and a partnership can improve the chances that a venture will be successful.
When you form a new business partnership in South Florida, it is a potentially complicated business transaction that needs to be put in writing in order to protect your interest as well as your partner’s interest. In spite of oral agreements being popular for partnerships, it is always best to have a written agreement and to consider hiring a South Florida attorney for a partnership agreement when the time is right.
Partnerships have benefits and disadvantages
There are several benefits and disadvantages to a business partnership that you should discuss with an attorney before you actually form one. One advantage is that partnerships are one of the easiest business entities to register. Also, income tax returns are easy for partnerships, and talented workers or executives can be attracted to this type of simple arrangement where they can become partners in a business. There are several disadvantages as well such as joint liability for the debts of the partnership, potential personal asset risk, and the potential for disagreements.
You need to decide which type is right for you
There are two types of partnerships: limited and general, and you will need to decide which type will work best for you. General partnerships are automatically formed when two or more people start a business to make a profit, and this form of partnership comes with joint liability for the debts of the partnership. A limited partnership gives one or more partners limited personal liability, while the other partner has a greater liability. In this case, the limited partner may be a passive investor or a silent partner who contributes money to the business but does not dictate how it should be run.
Partnerships must spell out the details in writing
One important step that is often overlooked is to outline the details of the partnership in writing. Business partnerships are sometimes complex arrangements that have many areas that need to be explained such as profit sharing, financing, labor, ownership, shares, dividends and more. Oral agreements are simply not enough for a business partnership and they often result in legal problems if conflicts or business problems arise in the future.
For more information about how to organize a business partnership or to ask any questions that you may have, contact Mark Schecter at Schecter Law today.