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Are you thinking about forming a business partnership? Starting a business with a partner affords many benefits. In a perfect world, that means sharing the expenses, ideas, workload, responsibilities, and profits.
In the real world, it can mean personal liability for the partnership’s activity, emotional ups and downs, personality conflicts, and differing ideas about the company’s product line, vision, and future.
Before you decide to form a business partnership, it is helpful to learn about the different types of business models and the advantages and disadvantages of going down the partnership path.
What Is a Partnership?
There are three standard types of legal entities called partnerships. You must register with the business agency in your state for any of them.
Benefits of a Partnership
When you are evaluating all of the work needed to get a business up and running, a partner can look very attractive. Having someone whom you can share the workload, decision-making, expenses, and the emotional roller coaster of starting a business can mean the difference between making the big jump or letting it stay a dream.
Other strong points in favor of a partnership include:
Drawbacks of a Partnership
Choosing the right partner will be the key as to whether your partnership succeeds or fails. It can be detrimental to the success of your business if your partner does not mesh in skills, outlook, commitment, money, and goals.
That is just one of the issues you can face when working with a partner. Others you may encounter include:
Reasons for Starting a Partnership
Just as there are good and not-so-good partners, there are good and bad reasons to enter into a partnership.
Good reasons:
Bad reasons:
Deciding to form a business partnership is one of the most significant decisions you can make for your business. Deciding on a partner is equally, if not more, important. Weigh the pros and cons of having a business partner. Choose someone you trust who adds additional skills to your business and has a personality that meshes well with yours. That is the formula that the most productive, successful partnerships have in common.