Choosing whether you want to take on a partner as part of your business, as well as who that partner should be, is one of the most important decisions you will make for your company. A partnership, like any business arrangement, has its advantages:
- Shared ideas, capital and resources may offer a stronger base for business success.
- Profit or loss may be divided however the partners choose.
- Partners declare their share of income on their own income tax returns.
And its disadvantages:
- Partners can have personality conflicts.
- All partners are responsible for debts of the company.
- All partners are responsible for any negligence.
- If sued, partners can lose their personal as well as business assets.
Although a written partnership agreement, like the one Liu, Hsu and Gao share, is not legally required, it's always wise to get things in writing. A good place to start is with the Small Business Administration. You can call the SBA Answer Desk at (800) 827-5722, or visit the SBA Web site, where you'll find helpful tips on starting a business as well as links to your state's Web site. Go to it!