Forming a Partnership

If you have decided to form a partnership then you must go through an extensive process to make your partnership legally authorized. In this act of deed you need to start with; • Discussing the details of your business with your partner(s) face to face. This includes the objective and goals of the business, the products and services that will be offered, where the business will be operated, what role each business partner will have in the growth of the business. • Decide which type of partnership is more suitable for your business. • Once you decide the form of partnership the next step is to get an Employer Identification Number (EIN) for you and your partners to use in the course of business. That will be necessary for you to open your business bank accounts, register with your state and pay employees. • Now, its time to draw up a partnership agreement. • File your business license in your state and be sure to register your business as a partnership, listing all owners. What is a partnership agreement or partnership deed? Forming a partnership agreement is equally important because it reflects the way partners will perform their duties and tasks. Registering partnership means setting out the specific conditions that apply to the partnership. It will spell out the responsibilities of the parties involved and should as a minimum cover the following provisions. • Amount of equity invested by each partner. • Type of business. • How profits and loss will be shared. • Partners pay and compensation. • Restrictions of authority and expenditures. • Length of partnership. • Dispute settlement clause. • Settlement in case of death or incapacitation. • Retirement and Death Arrangements. • Terms for changes or dissolving the partnership. • Distributing assets on dissolution. Is it necessary to develop a partnership agreement? A partnership agreement is the key to keep business on track although it is not necessary. rnIt is a common practice that when two or more people work together, they are generally more concerned with their ideas, innovations and creative directions, rather than their legal status. However, it is important to consider and resolve the rights, roles and responsibilities of each member of the partnership in writing before a misunderstanding or dispute arises. Written agreement helps in this regards. rnRemember a solid partnership should be founded on good communication. How can I register partnership? Partnership formation may take various forms depending on how the partners agree to create it and to carry out their objects and purposes rnCan I invest other than cash in a partnership? Yes, your investment can be either of any type like Physical Assets Furniture, Equipments, Land, Building etc. General Partnership: A general partnership (or simply partnership) is an association of two or more persons or other persons (such as a corporation and an individual) conduct business as "partners", whether officially or not, with the goal of earning a profit. All members of a general partnership are called General Partners. Each general partner takes part in the management of the business, and also takes responsibility for the liabilities of the business. If one partner is sued, all partners will be held liable. Anything that one partner does affect all of the partners, because each partner of the general partnership is personally responsible for all obligations of the general partnership. Forming general partnership is the least desirable for this reason. Liability of General Partnership. rnPoints mentioned below can better describe the liability of General Partnership. • Every partner acts on behalf of the whole partnership business; therefore, each partner is liable for his or her own actions. • Every partner is liable for the actions of the other partners. • Every partner is liable for the actions of the employees of the business.