Key facts about forming a business partnershipDecember 17, 2015 2:16 pm Leave your thoughts
When two or more people engage in a shared business enterprise, the result is a business partnership. This includes "the association of two or more persons to carry on as co-owners of a business for profit forms a partnership, whether or not the persons intend to form a partnership," according to the Uniform Partnership Act.
A partnership can provide many helpful legal and organizational direction for a business, as well as sort out various liabilities and financial entitlements. If you are thinking of going into business with someone, keep these facts about partnerships in mind:
A partnership can provide many helpful legal and organizational direction for a business, as well as sort out various liabilities and financial entitlements.
A partnership can be formed with just an oral agreement
Partnerships are one of the few legal relationships that do not require documentation. An oral agreement or even a handshake will suffice. However, for the purposes of avoiding partnership disputes down the line, it is highly recommended you enter into a written partnership agreement as prepared by an attorney.
The kind of business you are forming will dictate the type of partnership
For a business like an LLC, a limited liability partnership means that the company and the partnership are managed by the partners themselves in a structure called "owner management." For corporations, the company is managed by appointed or elected officers, called "representative management." While owner management does not require an official partner vote to make business decisions, representative management requires more formal procedures be observed before big decisions are made.
Not all partnerships are equal ones
Depending on what each partner is responsible for or contributes to the business, partnerships can be equal ones (with each partner owning an equal share of the business) or can be divided up so that one or more partners gets more of a share of the business than the rest.
The Arizona business attorneys at The Law Offices of Donald W. Hudspeth, P.C. would be glad to assist you in the formation of your business and partnership agreements. Give us a call today to get started.
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