What Are the Types of Partnerships?
Before you consider the pros and cons of a partnership business structure, you should understand that there are several different types of partnerships. Each one is slightly different, and the advantages and disadvantages change. When considering a partnership, you can choose a:
- General partnership: Two or more partners who are both responsible for managing the business, as well as the liabilities.
- Limited partnership: Limited partners do not have management duties and have no liability beyond what they’ve contributed. However, they do get a portion of the profits.
Limited liability partnership: This allows for limited liability for all partners. You can actively participate in management, as well.
What Are the Benefits of Partnership?
Now that you have a better idea of the different types of partnerships and how they work, let’s take a closer look at the advantages of this type of business structure:
- You’ll start with more capital. It takes a lot of money to start a business. If you can’t take out a loan or find an investor, establishing a partnership is a great way to split those startup costs to get your business off the ground. For example, if you have a great idea for a new food business, and you have a friend or family member who is passionate about food, you might consider asking them to partner up with you. They can then help to share in the startup costs.
- Regulations and laws tend to be easier on partnerships than LLCs, and business decisions are typically easy to make on a day-to-day basis.
Speaking of decision-making, partnerships are great for bouncing ideas off of one another. You might have a skill your partner doesn’t and vice versa. Being able to bring all of your talents together can make your business more successful. Those skills will also allow you to share in the responsibilities equally, so all of the work isn’t taken on by just one person.
