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Different Business Types - Partnership
Partnership
There are many types of partnerships that you can delve into. The most commonly chosen are general partnerships and limited partnerships. General partnerships can be entered into with a mere oral agreement or you can have lawyers draw up legal and binding partnership documents.
If you are considering the idea of having a partnership you should know that signing a legal partnership agreement is the best way to go about it. The legal fees for these documents are more costly than a sole proprietorship.
When you decide to enter into a partnership, you should be certain to add only the specifics of the agreement that you can both agree to.
Here is a list of some of the other things that you should have in place in a partnership agreement.
You need to know the following:
The type of business that you plan to run.
The correct amount of equity that both parties will invest.
How you will divide your profits and losses.
How much you are each compensated.
How you will divide your profits and losses.
How long will you plan to be in business together?
Set up provisions for any changes made and closing down.
Dispute settlement clause.
Restriction of authority and expenditures.
A reasonable settlement in case one partner dies or is incapacitated.
As you can see, there are many things to consider when starting a partnership. As with running a sole proprietorship, there are a lot of benefits and pitfalls as well.
Benefits
The cost of investing in the business is cheaper since they are divided among two people instead of one.
The money needed to process legal fees and everything else that requires money is cheaper.
There is assistance in dealing with the everyday tasks like, merchandising, employee issues, general dealings with the public and all general business concerns.
With two people running the business, each can have more time with their families and friends.
A partnership generally makes the profits and revenue much higher.
Losses are shared by both and are thus actually easier to deal with.
You will want to avoid making the same mistakes that they have, but it is always good to know what works as well if you plan to compete. Make no mistake about it, in the detail business; its the up-sells that promote best. The correct amount of equity that both parties will invest. You do not want to alienate your competition or build feuds with them because they can be a source of great help to you if you know how to approach them. When most people think of opening a retail business this is what they are talking about. |
