Gaizer.com Tips for Business Start-ups

You form a partnership  when you and another person (or persons) cooperate with time and capital to create a business but do not opt to form a corporation or an LLC. As with a sole proprietorship, you need to consider that you are still personally liable for business expenses. In addition, your partner(s) have “joint authority” in making business decisions. This means that any partner can bind the whole business to a contract (with the exception of selling the partnership, which requires approval from all partners). This raises the issue of “joint liability.” In other words, any partner will be required to pay the full amount for any business debt.

Another consideration with a partnership is that if one of the partners wants to leave the company, all partners must fulfill all business obligations and divide the assets and profits amongst themselves before ending the partnership (you can avoid this problem with a buy/sell agreement).

Should You Form a Partnership?

If you trust your business associates to make the right decisions, the partnership can be a simple and less expensive business structure to create and maintain in New York than an LLC or a corporation since the filing fee is less and you can save on accounting and legal costs. Furthermore, the partnership itself does not pay taxes. Business income and losses are reported on the partners’ personal income tax returns.

Other: Limited PartnershipIn a limited partnership, one or more general partner(s) manage the business while the limited partner(s) contribute capital and share in the profit of the business. The limited partner(s) do not take part in the management of the business. A general partner assumes personal liability for the business debts while a limited partner is only risking the capital contributed to the partnership.