McMillan Metro, P.C. Can Help You Decide If Starting A Partnership Business Is Right For You
We can accomplish more working together than we can on our own. That truth is the reason for starting a partnership business. But it’s also true that going it alone is preferable to being in a bad relationship. Finding the right course of action for your business and your unique partnership opportunities is what the experienced attorneys at McMillan Metro, P.C. help you do.
The most obvious advantage of a partnership is that there’s more talent on hand with a personal stake in the success of the business. One person might excel at producing the product or service that’s being sold. Another might have a gift for accounting and managing day-to-day operations, while yet another individual might be skilled at marketing.
Those are just three of the vast array of important skill sets required to create a successful business, and with the partnership structure giving everyone an equal share, your partners are—quite literally—invested in your success.
Furthermore with multiple people involved, obtaining credit can be easier. As you expand the number of employees, the partnership structure makes it relatively easy to offer the carrot of ownership to a particularly valuable employee. Finally, partnership is also easy to form. The paperwork requirements are the easiest of any business structure.
But before you immediately decide to take on a partner, be aware of the pitfalls that can cause significant damage to your dream of starting a new business. Foremost among them is being sure that you’ve chosen the right people to partner with. A general partnership means that each owner has an equal share, which means an equal level of control in making important business decisions.
There’s also a paradox within the partnership—while liability is spread jointly among the partners, each one also assumes liability individually. That means that any liability your partner incurs, you’ll be left with—even if they choose to leave the business entirely. Often partnerships are attractive because they are easier than corporations or LLCs, but this increased liability is the cost of that convenience. Is it worth it? We’ll help you decide.
McMillan Metro has walked this same path with many entrepreneurs over the last thirty-plus years, and we not only know what questions to ask, but we understand what precautionary measures need to be taken to protect your interests. For example, do you have a buy-sell agreement in place with your partners? This agreement lays out the terms of withdrawal for any of the partners, provides methodologies for valuing each person’s shares, and outlines a course of action in the event one of the partners should pass away.
It’s not uncommon for prospective business partners to also be personal friends. More than one friendship has fractured on the reefs of business misunderstandings and disagreements. An experienced business attorney might not be able to guarantee how your personal relationships will unfold, but we can make sure that a proper structure is put in place that clearly outlines responsibilities and ensures there are no misunderstandings of anyone’s role and obligations.
The simplicity of a partnership is attractive, the potential liability might be a little scary. Finding the best choice for you means asking the right questions and executing the most effective strategy. And that’s what McMillan Metro excels at. Contact us today to set up a consultation.