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NE Nebraska | We were in a partnership for many years and it worked well. 50/50 deal.
We were at the same stages in life and both sides brought something beneficial to the table.
Periodically we'd sit at a table and go over the transactions and numbers and each would submit bills for their services.
It worked well but it was based on a lot of trust.
I kept the books, but they were open for viewing at any time, and the partner felt comfortable coming in to get info and my ability to get it on the spot.
But in a partnership, each partner is jointly and severally liable for debts of the business, so be prepared if a partner has personal issues (divorce, gambling, high entertainment expenses) that affect his spending or time commitment to the business.
Furthermore, make sure you're on the same page as to what constitutes a legitimate business expense.
We did not have a formal partnership agreement in that partnership but things were pretty straight up.
It was pretty easy to dissolve when partners decided it was time to separate.
Now, as we're bringing our son into the operation we have both a general partnership and LLC's for specific needs.
Both have formal agreements and separate tax ID's, separate accounting, etc.
Personally, I'd prefer the LLC even tho it's a bit more complicated.
We're aware of a current ongoing situation of a partnership where one of the partners has died.
Agreements & promises had been made, but not in writing, one of which was regarding shares of ownership.
Furthermore, there are accusations of impropriety regard use of funds as they review the books.
We've only heard one side of the story, but it could get ugly. | |
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Forming a Partnership
