Better little business plan – forming limited partnerships

Generally, when managing small businesses with one or more people, your best choice is to form a partnership. In partnership, partners share everything from decisions at a cost to lower and (hopefully) profits. The most integral part in any business is to have clear goals and priorities, and the means to achieve this goal. Partnership is a good concept if, for example, you lack capital and you know someone with money to invest.

Of course, when choosing your partner or partner, you must remember that no matter how well you think you know someone, you will never really know them until you work with them. One common cause for small business failure is disagreement between partners. Partners can no longer approve basic goals and methods, and find them can no longer work together.

To avoid such problems in small businesses, you can form informal partnerships or limited partnerships, which will allow partners to pursue goals and make decisions without the approval of other partners. Partners can, for example, take a binding contract without the need for approval or input from other partners. Of course, in taking this approach, the best method for running a small business limited partnership is having a lawyer that composes the agreement that describes how the business will run.

Such an agreement must be careful in thinking (or concept, if you want) and written details, and must overcome everything about the operation of small businesses – which are responsible for any particular aspects, how investment and financing will be regulated, how profits are divided, and decisions which requires mutual agreement and what can be decided individually. In planning and compiling a detailed partnership agreement, all partners will understand how the business will operate and what their responsibilities must help avoid disputes in the line. In regular partnerships, differences of opinion tend to appear rapidly before the final plan is compiled – these differences are very important to overcome in partnership.

In regular partnerships, all partners are responsible for everything in small businesses, the most important is finance and debt. Each partner is personally responsible for debt, which means that everyone may have to sell their goods or homes only to redeem small business debt. It also means that if one person cannot pay debt – or even disappear without paying debts – the rest of the partner must pay the remaining bills.

However, you have the option for limited personal responsibility between partners for business debt by preparing limited accountability partnerships. In limited accountability partnerships, financial liabilities are limited to the amount of money invested by each partner at first, and only for personal guarantees given by each member if they borrow money for business. Keep in mind, that limited accountability partnerships are a little more complicated and a little more expensive to be formed, and you will need help of a lawyer or agent that forms the company to regulate such partnerships. If you want to pursue a limited partnership for your small business, or if you are interested in learning more, your local SBA can give you more information and suggestions in forming the partnership.