Partnerships

which business entity is best suited for your particular needs!”

There are three main business formations possible when creating a new business enterprise: the sole proprietorship; the partnership; the corporation. There are general and limited forms of partnerships and regular and subchapter S corporations. While they all have particular advantages and limitations the partnership formation is one that is fraught with many risks. Further, other formations, especially the subchapter S corporation, offer more advantages without as much risk-particularly in the area of liability. Before analyzing the future of partnerships, it is necessary to define this type of formation. A partnership is a “contract among persons to conduct a business and share the profits and losses. In partnerships, two or more join together to share assets and talent to make a business. A legal partnership agreement is drawn up for signature by all parties. The agreement defines the nature of the partnership, details what each partner is to contribute, how each is to be rewarded, and addresses such issues as might arise in the future,” (Sizer Warner 32). The partnership must file a tax return but pays no taxes itself. The money the partners receive is taxable income.

Partnerships are like a marriage where both individuals contribute to the relationship in order to produce a total that is more than

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rk load and financial risk. Of course, to have a truly successful partnership, one must find the ideal partner(s) to be able to reap these benefits. The relationship needs to be a symbiotic one in which the partner’s contributions are not just equal but complimentary as well, “The ideal partnership is built on a perfect blend of complimentary strengths. One partner may have the salesmanship, the other a head for figures. One may be the inventor, the other the planner who executes the scheme. In a good business marriage each partner will bring out the best in the other. Venture capitalists, as a matter of fact, strongly favor financing a new business backed by a management team over one run by a lone entrepreneur. Management teams show better success records because the partners can rely on each other to share experience, personal resources, and workload,” (Kingstone 71). The biggest risk of a partnership is that all partners are liable for the actions of others, except, of course, in a limited partnership where they are responsible only for the amount of capital they have invested. Regardless, where our discussion of the general partnership is concerned, this drawback is a serious consideration, especially when the subch
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Approximate Word count = 1608
Approximate Pages = 6 (250 words per page)

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