You have a lot of options when it comes to choosing a business structure that is right for you. And while it may seem like nothing more than a formality, the structure that you choose can actually have significant ramifications for your later. That’s why if you’re considering creating a partnership, you need to be aware of the advantages and disadvantages of going that route.
The advantages of a partnership structure
There are many advantages to a partnership. They include:
- Having more owners to collaborate with on strategies to achieve the business’s goals
- Reducing startup costs
- Increasing access to the capital needed to get your business up and running
- Increasing the knowledgebase that you have to start and run the business
- Increasing your capacity to borrow for business expenses
- Maximizing your ability to split income with significant tax savings
- Allowing you to retain a significant amount of control over business operations
The disadvantages of a partnership
Every business structure has its disadvantages. With a partnership, you might want to be especially cognizant of the following:
- You may be personally liable for the business’s debts
- You may have to take accountability for the actions of other partners
- You have to share in business decisions
- You have to split profits
- Disputes with other partners may be difficult to resolve
- Valuing business assets to buy out a partner can be time-consuming and costly.
Which structure is right for you?
As you can see, there’s a lot to consider when contemplating a business partnership. And you really should fully analyze the risks and rewards of each business structure type before settling on the one that you think is right for you. If you could use some help in conducting that analysis, please consider reaching out to an attorney who is well versed in this area of the law.