Starting a Business

How Do I Bring Partners into the Business?

min read
Opinions expressed by Entrepreneur contributors are their own.
Business partners can be hands-on or passive investors, so the first thing you need to determine is which kind of partner you want.

Do you want someone local in Mexico? Do you want someone who will assist you in an active management capacity? Or do you want someone to provide you with boatloads of money so that you can hire more staff? One size does not fit all, so you want to get clear on what you need to accurately assess whether your potential "partners" can provide it.

Friends don't necessarily make for good business partners. You will want to carefully screen anyone you let into your business. Ask for credit reports and do background checks. And, yes, even with your friends.

In fact, especially with your friends. If you want to maintain your friendship, be even more vigilant about handling your business dealings and a professional manner.

Beyond that, be sure that you have a business entity that can accommodate different categories of owners. An S Corp will not give you the legal flexibility you need -- bringing in passive investors is best accommodated through a limited liability company or a C Corp.

And always have it done in writing. A qualified business attorney can help you navigate the variety of business partnership issues you will want to address.

Related: How to Find the Right Investor for Your Business
Related: 10 Steps to Organizing an LLC

More from Entrepreneur

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.