Your business is growing and you’ve decided to join forces to create a business partnership. Here’s how to choose the right type of partner for you and your enterprise.
By Craig Falck for Africa Report
Photograph: © Dennis Owusu-ansah | Dreamstime.com
Partnerships are limited to more than two partners, but never more than 20. However, there is more than one type of partner that you can choose from. General partners are partners in the enterprise who not only have made a contribution to the business in a physical and quantifiable form (money, resources, assets, and so forth), but also have a say in how the business runs. Depending on the agreement and the partner’s contribution, they could own a significant share of the business; sometimes even enough to own a majority share. When you invite a general partner, it’s usually a good idea to limit their share control so that you are still the majority role player in the enterprise and don’t find yourself being bullied or controlled in your own business.
Limited partners are more commonly referred to as silent partners. They’re more like investors, to be honest. They make a contribution and are happy to sit in the shadows while the business is run by the other partner or partners, taking their fair share of the profits made by the enterprise. The big difference between limited and general partners is that limited partners have limited liability should the company run into financial problems. With a general partnership, all of the partners are liable – not just one or two, but all, together, as a whole.
Limited liability partnerships are more advanced than both general and limited partnerships. This is in the way that all partners are liable but at the same time all have limited liability with regards to the partnership’s debts and financial concerns. This is probably the most ideal form of partnership to enter into, especially when you have another person involved in the management of the business. You can never be 100 percent sure of what people will do, and the last thing you want is for your house and belongings to be repossessed because of someone’s bad business practises.
Inviting someone into your business as a partner is a tricky business and you need to make sure that you choose the right form of partnership before allowing him or her access to something that you have worked incredibly hard to achieve.
Source: biztaxlaw.about.com/od/startingapartnership/f/typesofpartnshps.htm
Saul Pruitt
February 27, 2012
Superbly written post, if only all bloggers offered the same quality information as you, the internet would be a much better place. Please keep it up! Cheers.
Dannie Kloepper
February 29, 2012
Good blog post. I used to check continuously this website; I’m very impressed! Very useful info. I really need such information. I was seeking this kind of info for quite some times. Thanks & good luck.