THINGS THAT YOU SHOULD KNOW BEFORE YOU SIGN A PARTNERSHIP CONTRACT

Many people join up with friends or simply find partners to work with in business, however there are a lot of things that you should know and consider before entering into partnership with someone. The legal partnership is a kind of relationship in business between 2 or more people. Usually it is easier to form a partnership for small business. For some spheres instead, it can be harder to create partnership. It is actually better to form a partnership contract and to indicate in it what the responsibilities of partners are, how much they are expected to do. It is also advisable that professional small business attorney looks it up and tells some kind of opinion about it.

Partnership of course can be both good and bad idea. It depends on how to cooperate, how it works and actually on who your partner is. However, there are things that you must know for sure, in order to be able to form the partnership.

1. Thus, one of the things that you must know before you sign a partnership contract is that there are 3 main types of partnership.

• Joint Ventures are those partnerships that end up in a certain time, or after the project is over. So it is a kind of limited partnership that will end up at some time.
• General partnership is the kind of partnership where the profit is divided equally or unequally, according to the percentage of  the income that they have.
• Another type of partnership is the limited partnership. This is when the partners choose when somehow to limit their input, just the way when one of the partners is running the business, while the other one is investing in it.

2. The next thing that you must know for sure is that all business must have tax ID, however partnerships do not pay taxes. Instead of normal taxes, they have annual information return which means that they report about the amount of income. Individual partners report about the income and then they pay taxes on their own individual returns.
3. Another thing you should know about partnership will not be a good news for you. The thing is that partners very often turn into enemies. You can face a lot of hard times in business, you can have problems with running the business, or work under huge pressure and even if your partner is your best friend, then you can become the worst enemies.
4. Liability is another thing you should know about partnership. Partners share the liability, that is the both the financial and legal issues for the business. If the brings some income, then the income is shared, but when there is no income or the business loan for example fails, then the barriers is put over the shoulders of both partners.
5. Another thing you should know before signing a partnership contract is that actually you will find out a lot of things about your partner. The thing is that we get completely another impression of the person when we see him in life and when we see him in business and work. Some people can change a lot and even if it is your best friend, you may be shocked because you will watch him or her from the different and unknown side to you and that will be a great surprise to you. SO get ready to understand that you may find some qualities which you have not noticed before in your partner.
6. The process of making decision is also very important when it comes to partnership. How are you going to decide on whose word is the last one if you have different opinions? This is where most of the problems come from. It is even harder in small business. In this case one of the partners must be leader and the other one must be more compromising person. In this case it will work out well. However, the compromising side can eventually be fed up with compromising all the time. You can also include mediation clause in your partnership contract which will prevent you from unwanted scenario.

These were most of the basic things that you need to know about forming a partnership with someone, be it just a business partners, your best friend, a family member or whoever.  You can see that partnership can have good sided but there are also some bad sides in it. You have to count whether you work well as partners or you better divide. There are some cases when best friends become the worst enemies because of partnership failure or problems. So make sure that partnership is a great option for you because it can make a lot of things much easier but at the same time it can make it much more complicated.