Small Business

Building a Partnership

21 Aug , 2014  

Partnership is another type of business structure but this time, you’re not alone, you work with someone else as a partner, like the word implies. When building a partnership, both are expected to contribute and share with the businesses ups and downs. Also, when creating this type of business, it must be legalized by both sides deciding because it’s not being alone anymore; you are to consult each other for every decision.

There are types of business structures that fall into the partnership category. There’s the General Partnership where both parties divide the duties, liability and profits equally; Limited Partnerships for a short-term partnership period; and the type where the partnership is only for a single project called Joint Ventures. There can be other types too, depending on the circumstances. Now, how do you form a partnership?

  • Always begin with registering your business in your state. That way, the government can protect your reputation, tax deductions, liabilities and other important business items
  • You need a unique business name and it’s up for you to decide with your partner (example: a name from both of your surnames)
  • Obtain your business licenses and permits, this is of the utmost importance
  • Obtain tax permits. Partnership taxes mostly include Employment taxes, Excise taxes, Income taxes, self-employment taxes and annual return of income
  • Legalize your partnership through filling out necessary documents
  • Take time for research to know what more is necessary because sometimes, there are requirements needed depending on your business type or state

Remember that there are advantages and disadvantages to almost everything which includes this partnership business structure. Some disadvantages are: you can’t decide for yourself; joint liabilities and disagreements. But there’s also the bright side: because let’s admit it, working with someone makes the job a lot easier and both can reap from the expertise of the other.

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