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Dunn Lambert, LLC
comprehensive legal services for businesses call 201-957-0874

Understanding how partnerships work

Some New Jersey entrepreneurs may decide to structure their ventures as partnerships. Partnerships involve two or more people sharing in the profits or losses of a company. They may also share in the company's debt and other obligations. As a partnership may be a complex business arrangement, it may be worthwhile to have a partnership agreement. This agreement may spell out how new partners are brought in or how the partnership may be dissolved.

There are three different types of partnerships that an entrepreneur might choose. The first partnership is the general partnership. A general partnership gives an equal share of the company to all partners. If the percentages are going to be unequal, the share each partner controls must be spelled out in the partnership agreement. Joint ventures involve two or more people or entities collaborating on a specific project or for a specific length of time. Those involved in a joint venture may file to continue their partnership for as long as they wish.

Finally, a partnership may be considered a limited partnership or limited liability partnership. In this scenario, partners are only liable up to the percentage of the company that they own. Limited partners will also have limited say in management decisions and are usually desirable for those involved with projects on a short-term basis.

Before entering into a partnership, it may be a good idea to consult with a business law attorney. Many issues may need to be ironed out before business operations begin. For instance, the size of each partner's share in the company, when shares can be sold and how a partner may leave the company should be decided before a problem arises. An attorney may be able to draft legally binding documents that hold each party to their obligations.

Source: The U.S. Small Business Administration , "Partnership", October 01, 2014

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