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Before choosing a business partnership, understand the types

| Mar 11, 2021 | Business Law |

Having an idea and having the wherewithal to bring it to fruition are very different things. Many Michigan residents may have great ideas for a business but may not have the abilities, means, funds or other important details to make that business idea a reality. However, they may know someone who could help bring the idea to life, and those parties may consider creating a business partnership.

Partnerships can have various benefits. As mentioned, two people with different abilities may come together to benefit from each other’s ideas and resources. It is also possible for business partnerships to have better tax incentives than other types of business entities, like corporations. It is important to weigh the many pros and cons of a business partnership before deciding this is the best option.

It is also important to consider the different types of partnerships, which include:

  • A general partnership, which involves each partner taking equal legal and financial liability for the goings on of the business as well as equally sharing in the profits
  • A limited liability partnership, which limits the risks each partner faces due to the actions of the other partners
  • A limited partnership, which is a hybrid of both a general partnership and a limit liability partnership and involves at least one partner being a general partner who has full personal liability for the company’s debt while the other is a silent partner

Making any business decision requires a great deal of thought, and if Michigan residents are considering creating a business partnership, they will certainly want to assess the personal, financial and legal implications of that choice. Fortunately, interested parties can obtain reliable assistance from legal professionals. Knowledgeable business law attorneys can help prospective business owners choose the right entity and create any necessary contracts.

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