Dangers of a Partnership Partnerships Can be Formed with a Handshake – Only Entity that can be formed by a verbal agreement In a partnership you are.

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Presentation transcript:

Dangers of a Partnership Partnerships Can be Formed with a Handshake – Only Entity that can be formed by a verbal agreement In a partnership you are subject to unlimited liability – A partnership usually may not sue or be sued in its own name. The partners must sue or be sued. – A partner may not sue his partners. His sole remedy is to seek an accounting between the partners. Divided power No one will want to give you capital Usually no life beyond the death of a partner

LLC You Me

Equity Fund Limited Partners Private Equity (General Partner)

Joint Venture Company B Company A

How to forge a strong partnership

Choose the Right Partners

Consider Other Legal Formats LLC Limited Partnership S-Corp

Create a Formal Agreement

Fulfill Other Legal Requirements

Get the Agreement Right

1.How will the ownership interest be shared? 2.How will decisions be made? 3.When one partner withdraws, how will the purchase price be determined? 4.If a partner withdraws from the partnership, when will money be paid?

Don’t just partner with someone because you can’t afford to hire them

Never split your company 50/50

Maintain Your Relationship

Online Resources corporations.utah.gov/business/genpart.html Onecle.com 214,00.html

References AllBusiness. (2011). Top 10 Mistakes Businesspeople Make When Forming Partnerships. Retrieved March 19, 2011, from AllBusiness.com: structures/business/ html Burns, S. (2011, March 21). Family Partnerships. (V. Eisinger, Interviewer) Finkel, D. (2011). The 30 Key Questions to Ask Before You Form Any Partnership. Retrieved March 19, 2011, from AllBusiness.com: activities-management/company- strategy/ html Mould, C. (2011, January). S Corp. vs. LLC: Which Structure is Right for Your Business. Retrieved March 22, 2011, from PowerHomeBiz.com: