So you are thinking of starting a business? That’s great! Have you talked with your lawyers in Tampa yet? There are many ways to structure your business, so look for some advice. Also, the first people you may look towards including in your new venture are your friends and family. Our business lawyers in Tampa want to make sure you think seriously about this. Entering into a business partnership allows for a quick way to start a business compared to incorporating. Make sure to consult with your local Tampa lawyer when deciding how you want to structure your business.
Legal Business Partnership
This type of partnership is just a different form of an unincorporated business relationship. The business is still subject to taxes, regulation, and govt. inspections. But, the advantage is that you can start your business with less hassle and get it up and running. To form one, you must register with state and local governments, as well as the IRS. Even if you are working with friends and family, it’s always a good idea to have a legally binding partnership contract. This is to clearly lay out the responsibilities of each partner. Of course have a lawyer look it over to make sure everything is within the law.
Benefits Business Partnership
One of the great things about a partnership is that there is no messy paperwork or fees that you would otherwise see when incorporating. This could be very important for some cash-strapped startups. Another benefit is that each partner contributes to the business. This includes decisions, profits, and taxes. This can be a great stress relief since the other partners can support each other. It’s also a great way to have each partner showcase their strengths and be confident in knowing that the others can cover their weaknesses.
Partnerships do not pay taxes. Instead they file with the IRS and state-level revenue services. This means they must obtain a tax ID number or permit. What they then do is file an annual information return. This report details the amount of income that the business generated. The partners then report the income on their individual tax returns. This is commonly referred to as “pass through.”
Personal problems. This is one of the biggest disadvantages. Working with friends and family in a business setting puts a lot of stress on everybody. This can really ruin a business. Another major problem is liability. Partners share the legal and financial cost for the business. Their personal assets are exposed. Again, it’s good business practice to have a lawyer involved when structuring a business.
Your business might have outgrown your partnership. It’s important to know when to dissolve the partnership to avoid growing pains. For instance, if there are too many partners, it’s time to change. This also includes if the liability becomes too much or when you need more capital from a lender. Be aware of your growth!
Check out our blog for more tips and info. Contact Fresh Legal Perspective today by calling (813) 448-1042 and ask about meeting one of our lawyers!