There are many types of partnerships to choose from for your start-up business. The most common ones are a general and a limited partnership.
The general partnership is easy to start since it can be done through a verbal agreement although it is advisable to get a lawyer to draft a contract or legal and binding partnership documents.
Just like any agreement, when you go into a partnership, you must make sure that you choose terms and conditions you and your partner can agree on.
One benefit of entering a partnership is that the costs drop since they are divided among the partners. Legal costs will lessen too when you have someone to share them with.
You will also have someone to help you deal with everyday duties like merchandising, employee issues, dealing with the public and many other general issues.
You will also have more time to spend with your family. Unlike in a sole proprietorship, the chances of maximi- sing profits are much bigger in a partnership. Another benefit is that losses and risks are also shared by partners.
If you choose to be a sole trader, you must face all the risks and losses on your own. You must carry out all the business duties on your own, which automatically reduces your family time.
Consider the following carefully before entering into a partnership:
l The correct amount of equity that each party is going to invest;
l How you are going to compensate each other;
l How long you plan to be in business together;
l Provisions for any changes and closing down;
l Dispute settlement clauses;
l Restrictions of authority and expenditure;
l Reasonable settlement in case one partner dies or becomes incapacitated;
Just as in the case of signing a business contract or deal, think carefully about the above and make sure that they are written down in the partnership agreement.