Choosing a business structure is an important decision. If you are going into business for yourself, structuring your business as a sole proprietorship might seem to make the most since.
However, if you have someone willing to go into business with you, there are some advantages to a partnership you may want to consider.
Although the idea of a sole proprietorship could seem appealing because you maintain control and ownership of the business, this could put you at risk. Being a sole proprietor means that you not only own all the business assets, but you are solely responsible for all business debts.
In a partnership, the debts are shared between you and your business partner. This is generally true even when the amount of liability is uneven.
Shared responsibility
Controlling everything as a sole proprietor often means you have no one else to share in the responsibilities of running a business. As your business hopefully grows and becomes more successful, you will get busier and these responsibilities will only grow.
Having a partner means you have someone to share these responsibilities, taking the pressure off you to do everything. This assumes that you have a general partnership, which means you and your partner have equal rights as partners.
A limited partnership means involves one general partner and one or more limited partners. While you will still have some of the benefits of a partnership, such as having control over most or all decisions, some of the responsibilities can be delegated to the limited partners.
Combining skills and talents
One major advantage to a partnership is you can partner with someone who has different skills and abilities. Perhaps you are great at negotiating and marketing but struggle with running numbers and doing budgets.
A partner with a background in accounting or another type of data field could use those skills to help the partnership, while you could focus on areas where your strengths lie.
Knowing whether to form a partnership and what type of partnership to form is not an easy decision. You should always examine the pros and cons of each option.
