When you’re going into business, there’s a lot to consider. You’ll need to identify your target clientele, assess the competition, secure a location, hire and train personnel, develop marketing strategies, and firm up supply chains. Yet, before you get to all of that, you’ll need to decide what type of legal structure you want your business to take. It might sound like a minor detail compared to all of the decisions you’ll have to make going forward, but the truth is that your business structure can have ramifications on you and your business for the entire life of the entity.
This week, let’s briefly look at the partnership. Generally speaking, a partnership is formed when multiple parties come together in furtherance of a common interest. In the business context, partnerships are beneficial because they can spread the risk and allow for more diversified talent and experience at the top. However, one of the biggest disadvantages to a partnership is that each partner is personally responsible for the liabilities of the other partners.
If that makes you uneasy, there’s good news. You can choose to utilize a limited liability partnership. Here, you get all the advantages of a partnership while limiting your liability to only those assets that you place into the business. In other words, your personal assets should be shielded.
Many people enjoy the flexibility of limited liability partnerships, too. This business structure can allow multiple individuals to engage in the management of the business while bringing partners in and out as deemed necessary. This gives the business the ability to shift duties and free up time as needed, which many business use to allow partners to focus on bringing in new business.
Of course, the limited liability partnership is just one of the many types of partnerships that can be utilized in the business world. And partnerships are just one of the many broader categories of business structure. So, before you jump into your business or rush to pick a structure so that you can get to the meat of your business operations, think about informing yourself as to your structure options so that you can settle on one that is best for you. After all, this could save you a lot of time, money, and headaches in the future.