As you gear up to start your business, you’ll have to make a lot of decisions. You’ll have to secure a location, develop a marketing strategy and secure supply lines and talent. It can all be a little overwhelming at first, but these early decisions can be critical to your business’s sustainability and overall success. As such, it’s crucial that you take the time needed to research and fully understand the issues before you so that you can make the informed decisions that are right for you and your business.
This holds true when choosing your business structure, too, which is another matter that you’ll have to decide on early on in the startup process. While you have a lot of options at your disposal, not all of them are going to be beneficial to you. That’s why you might want to delve more fully into the various structure types to learn more.
Is a partnership right for you?
One business structure option that you have is the partnership. Here, two or more individuals come to an agreement on joint ownership and management of the business. This agreement also specifies how profits will be split among the partners.
There are many benefits to this type of business structure, including each of the following:
- Control: Unlike with a corporation where major business decisions may have to be signed off on by shareholders or a board of directors, you retain a lot of power in a partnership. You and the other partners are free to make the decisions that you think are right for the business, which leaves you and your partners in full control.
- Perspective: In a sole proprietorship, you are somewhat limited by your own knowledge, expertise and abilities. In a partnership, you’re able to rely on the skills that your partners bring to the table to address challenges that fall outside of your abilities and your comfort zone. This ensures that your business has a more comprehensive ability to deal with the issues that it confronts over time.
- Resources: A lot of people who want to start a business simply don’t have the financial resources and the know-how to get their company up and running. In a partnership, though, you’re able to pool the resources that you and your partners have. This can make it easier to get your business up and running successfully.
- Profits: In a partnership, you’re typically able to take a greater share of profits, dividing them with your partners as specified in your partnership agreement.
- Work-life balance: Because you’re able to share your managerial duties with your partners, you may find greater work-life balance by using this business structure. You’ll just have to keep in mind that disagreements over management decisions and strategies can arise, and you’ll need to be prepared to address those.
Choose the business structure that’s right for you
Although a partnership might be a good option for your business’s structure, it, like other structure options, does have its disadvantages. For example, depending on the type of partnership that you create, you may be personally liable for the business’s debts, which could put you at risk.
That’s why before settling on a business structure, you should make sure you fully understand each of them, including their limitations. If you think that you need some assistance in understanding what each of these options entails, you might want to discuss them with an experienced business law professional who can help steer you and your business in the direction that you want it to go.