Deemed as the simplest structure in putting-up a business, a partnership establishment is much inexpensive than starting a corporation. It is an unincorporated concord wherein the co-owners or partners invest their shares and form a single business entity. These individuals are then entitled to get their percentage on the partnership's revenue. Typically, a partnership may be either a general partnership or a limited liability partnership.
The main difference between the two can be determined on the extent of control and liabilities of its owners in the business. In general partnership, the partners completely manage the business operations and have the full responsibility regarding the partnership's debts and obligations. Hence, in case of bankruptcy, the courts can legally seize the owners' private assets to shell out their debts from their creditors. On the other hand, the owners of a limited partnership do not have any involvement in the partnership's business operations. Their liabilities only rely on the amount of their investment.
A partnership establishment can be a failure or a success. Thus, we greatly advice our clients to follow these steps strictly and come up with a good partnership:
- Share the same visualization on your business. It will be best if all the partners agree on similar strategies and implementations that will be beneficial to all.
- Identify your individual functions in running the business. Knowing your distinct talents and abilities will help you determine who will best fit a certain role or position.
- If possible, never have a 50-50 share on the partnership business. This may only bring deadlock in case you will need to make a vital decision in the future. It is therefore recommendable if one partner has a larger share in the partnership establishment.
- Schedule a partnership meeting at least once a month. A meeting is a good communication channel for all the owners wherein you can tackle all the issues affecting your business.
- Plan and develop a written partnership agreement. This will serve as an arrangement or record for future verification if problems come out in the future.
If you need our legal assistance, call us at our office and schedule a meeting with us. Our Expert Los Angeles Attorneys are willing to guide you in your partnership establishment. We will make sure that our legal counsels will impart their Business Law expertise to your business.
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