3 Tips For Forming A Successful Business Partnership

The entrepreneurial spirit drives many people to start their own business. While many strike out on their own, it can be more beneficial to start your business with a partner.

A partnership allows you to work together with someone who complements your personality and has strengths in business administration areas where you may be lacking.

The formation of a business partnership should always be completed by an experienced business attorney to avoid potential pitfalls in the future.

1. Select the Right Structure

The way that you structure your business can have a direct impact on your fiscal responsibilities over time. An attorney will be able to help you determine whether a general partnership or a limited liability corporation is the better business structure option.

Each of these entities will have different tax burdens and reporting responsibilities. Since tax issues can become a source of concern for business partners, it's best to work with an attorney to identify which structure type will offer the most benefits from the very beginning of your partnership.

A clearly defined business structure will allow you to eliminate disagreements and maintain the health of your business partnership.

2. Define Business Roles

The contract that your attorney draws up for your business partnership should clearly define all business roles and responsibilities. It's essential that each partner understands who will be responsible for marketing, operations, finances, and human resources.

Allocating these roles to individual partners lets you maximize the expertise each partner brings to the relationship. Clear definitions in your contract will also prevent one partner from overstepping his or her authority as you begin running a business together.

3. Create an Exit Strategy

All partnerships have the potential for failure, and a business partnership is no different. It's important that you and your business partner agree on an exit strategy immediately when the partnership is formed to avoid potential legal problems in the future.

Your exit strategy should provide instructions for the buy-out of the business by one partner, and the potential sale of the company if both partners want to leave the business.

Changes in your business partnership can make negotiations difficult, so it's best to have your attorney handle the sensitive topic of an exit strategy while both partners are on good terms.

A good business partnership will protect both parties against financial harm. An experienced business attorney can help you draw up a partnership agreement that will benefit both partners over time.

For more tips, reach out to a local business lawyer.