When a Louisiana business owner starts a company, he or she will have to make important decisions that could impact its future operations. One of these decisions is deciding the structure of the business. If there are multiple founders, then a partnership is appropriate, but there are several types from which to choose. It’s important to make the decision that will be best for your company.
A partnership is a type of business structure for a company in which there are two or more owners. Generally, they share profits and losses, and this can be a practical way to share some of the risks that come with owning and operating a small business. It may be helpful for you to learn about the various partnership options available to you so you can make a decision that will be beneficial for your long-term security and stability.
As part of the process of starting a business, you and your partner have to decide which partnership structure is best. This depends on the type of business you have and other factors. Some of your options include:
- General partnership — A general partnership involves two people who operate a business together. They have equal rights and responsibilities in the company, and they each carry equal liability for business debts and liabilities.
- Limited liability partnership — In this partnership, partners enjoy some tax benefits while also having some protection from personal liability for business debts.
- Limited partnership — In this type of structure, each partner is able to restrict his or her personal liability to the amount of his or her business investment. At least one partner has to agree to general partnership status.
Before you choose, it is in your interests to carefully assess the potential benefits and drawbacks of each type of partnership. It will be helpful to look at your long-term goals and objectives to help you make the best choice.
A solid foundation
Your partnership agreement will lay the foundation for how your company operates well into the future. Before you make any decisions, you will find it beneficial to consider the long-term implications and potential benefits of each type. The structure type you choose will impact how you and the other partners function together, a decision that can affect multiple areas of your company.