How to Start a Business with a Partner

How to Start a Business with a Partner

Many people starting a new business who don’t want to go it alone choose a partner, usually someone they know and whose skill sets may be different but complimentary to their own. Starting a Florida business as a partnership is simple, especially if you intend to operate as a general partnership.

With a general partnership, you don’t have to file any papers with the state, you can manage and split profits any way you like and the income passes through on your personal tax return. However, partnerships are not exempt from the filing of the licenses that any business entity must file in a given city or county within the state.

The biggest disadvantage of general partnerships is that they do not offer personal liability protection, so it is usually better to set up a protected entity like a limited liability company (LLC) or corporation to protect personal assets from business liabilities. In addition, you have the option of establishing a limited partnership, which has the advantage of not requiring a formal filing, unlike a corporation or an LLC.

The major difference between a limited partnership and a general partnership is that in a general partnership, each partner has the same equal financial stake and control over the affairs of the partnership.

In a limited partnership, there are both general partners and limited partners. Limited partners provide financing and can take either profits or losses depending on the financial performance of the company. Limited partners generally have limited personal liability as well. The general partners actually run the business and may have the authority to control any distributions or dividends owed to limited partners, depending on the terms of the agreement.

While the partnership should be represented by its own legal counsel when formed, principals of the partnership may each want separate representation up to and through entering into the partnership agreement to protect individual interests.

Florida business owners can avoid unnecessary risk by establishing the proper business entity to operate their companies. Contact one of the experienced Florida business attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com.

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