If you’re looking to launch a new business in 2020, you may find it more profitable to partner with another entrepreneur for added financial support, shared responsibilities, experience, and other mutual benefits.
Before signing any contracts and establishing a legal partnership, you may have some questions related to getting the process started or tips on how best to protect your business, should you and your partner ever decide to part ways. To help you get a head start in time for the New Year, here are the answers to three commonly asked questions about establishing a business partnerships.
What is a Business Partnership?
In the simplest terms, a business partnership is a shared ownership of a company between one or more parties. And there are two types of partnerships you’ll want to consider: (1) general partnerships and (2) limited partnerships. The type you chose will ultimately depend on whether you or your partner will be sharing the business’s responsibilities equally (i.e. general) or if you will become an investor of the company, while the other partner handles the daily operations (i.e. limited).
How Do I Set Up a Business Partnership?
Although it’s not illegal to enter into a business partnership without a written contract agreement between both parties, a lack of one could end up costing you the future of your business and/or the rights to your business’s assets. If your business is perceived as a partnership, for example, all parties will become liable for any issues that arise with the business (e.g. debt, any lawsuits against company, bankruptcy, etc.): “…if the partnership can’t afford to pay creditors or the business fails, the partners are individually responsible to pay for the debts and creditors can go after personal assets such as bank accounts, cars, and even homes,” (FindLaw.com).
Do I Need a Lawyer to Create a Business Partnership?
While it’s not necessary to hire a lawyer to establish a business partnership, it’s highly recommended. In terms of drafting contracts, settling disputes, and ensuring both parties are aware and made legally accountable for their shared responsibilities, hiring a lawyer can be an invaluable benefit to your company’s future success and sustainability.
To help protect your business’s assets and contract agreements in the New Year, contact the Minneapolis attorneys at KTF Law Firm. Our business lawyers can help you establish a business partnership that protects your assets, brand, and reputation!
We look forward to working with you in 2020!