Business Partnership Counseling Orangeville ON
416-466-4438
Toronto, ON
905-624-5300
Mississauga, ON
519-438-4981
London, ON
519-672-9330
London, ON
519-886-3340
Kitchener, ON
905-712-1911
Mississauga, ON
519-945-2375
Windsor, ON
519-673-5530
London, ON
905-486-2118
Mississauga, ON
905-339-6946
Mississauga, ON
Setting Up a Partnership
Seems simple, right? You and a buddy, or you and your spouse, want to set up a business. So you form a partnership and – voila! – you open shop.
Actually, things are more complicated than that when it comes to establishing what’s known as a regular or “general” partnership. It turns out, for nearly all startups, that it’s not a good idea to settle for that structure.
Here’s how to tell whether the cautions about partnerships apply to you:
- Realize you’re legally vulnerable
- Understand the default rules
- Draw up your own partnership agreement
Realize you’re legally vulnerable
Just as with sole proprietorships operated by individuals, general partnerships don’t protect you and your partner, or partners, against legal claims that might be brought against your business. You and your partner’s individual assets are just as vulnerable, legally, as your business assets are.
“If you form a limited liability corporation [LLC] or some other legal entity for your partnership, on the other hand, you’re going to be protected from the start against liability problems,” says Jeffrey Ferrara, partner with Boyer & Miller, a business-law firm in Houston.
Understand the default rules
Partnerships can get sticky, of course, if you and your partner decide to split up, or get into a dispute about how to divide profits, or responsibility for losses.
Copyright 2009 StartupNation, LLC