If you're just getting your small business off the ground, you may be trying to figure out how you want to organize. Go big as a corporation or LLC? Go charitable as a non-profit? Or go it alone as a sole proprietorship?
One of the most popular options for small businesses, due to its simplicity and lack of formal filing requirements, is the partnership. Here are five reasons a partnership might work for your small business:
Easy Setup. Partnerships are formed by a private agreement between the partners, and don't need to register their existence with the state like corporations or limited liability companies. Partnerships don't require a written agreement, but it's a good idea to have one, nonetheless.
Easy End. Just as easy as it is to form a partnership, it's simple to change or dissolve a partnership; all it takes is one partner giving notice of his express will to leave the partnership. (This may also be a detracting factor, depending on how you look at it.)
Easy Taxes. While partners are taxed on profits and losses from the business, the partnership itself is not taxed; therefore partners must only report profits on their personal tax returns, rather than creating a business tax return.
Easy Options. Limited partnerships, general partnerships, and even joint ventures, are some of your options when creating a partnership; each have their advantages and can provide your business with the flexibility it needs.
There are some drawbacks to partnerships, like personal liability for the partners and a difficulty adding investors. (Although forming a limited liability partnership could help.) To know if a partnership is right for your business, talk to an experienced business organizations attorney near you.