There are a lot of different ways that you can structure your business, which makes it an important consideration as you’re getting your endeavor off the ground. That’s why you should take the time needed to educate yourself on your options so that you can choose the one that is right for you and your business. After all, there are advantages and disadvantaged to each structure type.
The advantages of a partnership
A partnership, where you enter into an agreement with one or more individuals to create a business, has a number of benefits. To start, with just a few owners, you can retain an extensive amount of control over the business and how it operates. Second, a partnership can increase the amount of money you make since profits are only taxed at the individual level, meaning that profits skip the double-taxation often seen with corporations.
You might also have a better ability to secure funding through a partnership than you would if you tried to run a sole proprietorship, which means that your business may have a better opportunity to grow.
The disadvantages of a partnership
Partnerships have their disadvantages, too. The biggest is that you may be personally liable for the business’s debts and liabilities, which can put you at a lot of risk. This is true even if one of your partners engages in wrongdoing that leads to a settlement or a judgment. You might also see friction with partners over time with this type of business structure, which can threaten the viability of your company.
Taking legal action to minimize risk
A partnership structure may be right for you, especially given that there are ways to minimize the risks associated with this structure type. For example, a limited liability partnership might help shield you from some liability, and a well thought out and negotiated partnership agreement may help reduce the risk of conflict amongst partners.
So, with that in mind, if you’re thinking about starting a business, then you might want to discuss your circumstances with an attorney who can help guide you through the process and position you for success.