Two or More Individuals
A legal form of business operation between two or more individuals who share management and profits.
In a general partnership, the partners manage the company's operations and assume responsibility for debts and other obligations.
HOW TO GET STARTED
THE INITIAL STEPS
DECIDE ON A BUSINESS NAME
You can choose to go with a combination of the names of the partners, or choose a fictitious name.
CHECK BUSINESS NAME AVAILABILITY AND GET IT REGISTERED
Before making an attempt to register your business name, make sure that the name is available and not too close to an existing business.
If the business name is similar to another operating business, your use of this name will be rejected by most states.
CREATE AND SIGN A PARTNERSHIP AGREEMENT
This document outlines the terms and responsibilities that affect each partner.
The agreement will include the name of your business, the duties and responsibilities of each partner, how profit and loss will be allocated, the authority and decision-making powers of the partners, and other important terms.
REGISTER YOUR PARTNERSHIP
You also must register your partnership by filing a "certificate" or "registration" of partnership with the Secretary of State office.
OBTAIN BUSINESS LICENSES, PERMITS & REGISTRATIONS
In order to operate fully within the law, your partnership must adhere to all permits and license requirements.
GET HELP FROM AN ATTORNEY
To ensure that the partners are covering all requirements, it may be necessary to contact an attorney for a consultation or even on going advice.
PROS & CONS
BUILDING WITH A SMALL TEAM
Ideas can be bounced off of one another, allowing efficient and effective brain storming and problem solving
LOW COST TO START
Start up costs are low in comparison to a corporation or LLC. Partners are also able to split the costs among one another.
MORE BORROWING POWER
A partnership is more attractive to investors in comparison to a sole proprietorship
More opportunities to be backed by investors
Like sole proprietorship, there is limited regulation involved to get started and stay compliant
It's still easy to change your business structure if the partnership doesn't work out in the future.
Like sole proprietors, there is unlimited liability for debts and lawsuits
You are jointly and severally liable, meaning all partners together as well as each person individually is liable for damages or expenses if one is facing a lawsuit, all are facing a lawsuit: together and/or separately.
Differences in opinion or ideas can cause friction among partners.
If one member of the partnership leaves, you may have to disband the business or change your business structure
FIND THE RIGHT PEOPLE
Your team is your foundation and plays a significant role in the success of your business.
Regardless of how talented the members are, if the mission and goals of each member is different, the conflict will cause issues when it comes to company practices and procedures.
When building your team, look for the following traits:
DO THEY UNDERSTAND THE MISSION?
The team needs to know the goals of the business and needs to understand the direction of the business. Understanding the road map is important in understanding how to get there. If one of the partners has a different set of goals in mind, they may not be the best choice.
DO THEY LISTEN?
With more than one mind making decisions, it's important that each team member is able to listen when a member has an idea or a direction that they feel would be a good suggestion.
If egos get in the way, this inhibits the brain storming experience and can cause large disruptions in business practices in the future.
ARE THEY ABLE TO FOLLOW DIRECTIONS?
Brainstorming is important, but even more important is implementation. As the saying goes, "talk is cheap", so actions speak much louder than words.
It's impossible to set goals and achieve them if no one follows through with their set tasks or assignments.
DO YOU GET ALONG?
It takes more than expertise to have a team that works well together, it also takes some level of chemistry.
You're team will spend a lot of time together, so being able to get along with each other will help create a peaceful and productive working environment.
IS EACH MEMBER VALUED?
You may feel that a team member is valued, but if another member doesn't show the same level of respect, this can cause a level of resentment from the person that feels undervalued.
If a team member feels undervalued, they will inevitably leave the team for lack of appreciation. If vindictive enough, that same member may decide to take trade secrets to start they'e own endeavor.
BE A REALIST
Don't under or over estimate the skill set of your team members. If you recognize that a team member is really good at something, take note of it. And on the other hand, if you have a member that slacks off, take note of this too.
Regardless of whether the team is a group of friends or people that have just met via networking, don't make assumptions. Pay attention to the contributions, ideas and achievements of each member to decide on whether to keep your current team, create a new team or become a solopreneur.