Taking your business in the direction of a partnership can create great opportunities, benefits and means of expansion for your company. Here is what you need to know when forming a partnership:
Learn About Your New Partners
It is wise to do your research before entering any sort of business arrangement. There should be a mutual understanding and agreement when entering a partnership, and it is important to create good rapport with potential partners before the paperwork is signed.
Decide Your Type
There are multiple options for creating a partnership. The most popular form of partnership, also called a General Partnership, gives each partner equal responsibility as well as an equal share in profits and losses of the company. Another option is a Limited Liability Partnership where the Limited Liability Partner has limited responsibility, but also limited voting power. If you aren’t ready to commit to your new partnership full-time, you also have the option of entering into a Joint Venture, which is a temporary arrangement. The type of partnership that is best for you depends on your business goals as well as the goals of your prospective partners.
Fill Out the Paperwork
When you create a partnership, you are essentially changing the entity of your business and will need to apply for a new federal Tax ID number. Fortunately, you can get the entire tax ID filing process accomplished online through a trusted website and have your new Tax ID number within a day. From there, the new ID will be processed through the federal government and will become associated with your partnership. You’ll use that new ID for tax purposes for as long as your company remains a partnership.
While entering a partnership creates plenty of opportunities, it is important to enter the arrangement with appropriate care and preparation.
