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Home Reading. Selecting the Legal Structure for Your Business
There are two types of partnerships: general partnerships and limited partnerships. A general partnership is created when two or more individuals agree to create a business and to jointly own the assets, profits and losses. A limited partnership may be created only by following certain steps set out in each particular state's statutes. The primary advantage of partnerships is that they can have more than one owner; the most important disadvantage is that the general partners are personally responsible for the losses and other obligations of the business.
Start by Agreeing
You can start a general partnership by agreeing with one or more individuals to jointly own and share the profits of a business. There is no limit on the number or type of partners (i.e., individuals, other partnerships or corporations) you may have in your business.
A general partnership is deceptively easy to start because it can be formed by an oral agreement. However, it is advisable to have a written agreement signed by all partners addressing major issues relating to the business, including
How much time and/or money the partners will contribute to the business.
How business decisions will be made.
How profits and losses will be shared.
What will happen to the business and to a partner's share of the business if that partner dies becomes disabled or stops working/contributing to the business.
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