What is a Partnership?

 
 
what is a partnership?
 
 
 

A partnership is formed automatically when you start operating a business with another person (or multiple people).

 

The Pros

There's no registration, operating requirements, paperwork, or fees.

It's an easy tax season. You'll report your income on your regular tax forms.

 

The Cons

There has to be 2 or more owners.

You won't receive limited liability. Again, your personal assets are on the line here. This means you could be forced to use your personal assets to pay for your business debts. You'll also be personally liable for any debts that your partner creates.

It's not a great option for signing "dream deals." Big accounts typically have policies that prohibit working with unlicensed partnerships for legal and insurance reasons.

It's not an option if you're looking for investors. They don't fund partnerships because they don't want to be personally liable for your business debts.

 

Your other entity options

Sole Proprietorship

LLCs

C Corporations

S Corporations

 
 

 

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