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What you should know about business partnerships

There are many considerations when it comes to forming a partnership in Florida. Entering business with another person may make it easier for you to combine resources and complementary expertise, but it also affects your responsibilities and your liabilities. At Welbaum Guernsey, we understand that the type of partnership you enter affects your involvement in business decisions, your percentage of the company’s profits, and your liability if there is business litigation.

According to the U.S. Small Business Administration, there are three types of business partnerships. When you and your partner plan to complete a single venture together, such as the investment and sale of commercial real estate, you would benefit from forming a joint venture. If you plan to divide everything equally, you will probably want to form a general partnership. The division includes shared liability as well as profit, so both you and your partner are responsible if there is a lawsuit. Limited partnerships offer protection from full liability for its investors and partners, so the percentage of your investment determines your liability.

Although Florida law recognizes partnership agreements that are oral or implied as well as those that are documented, it is most beneficial for you and your partner to have a formal, written agreement. This can provide protection if you discover your partner has engaged in fraud or deceptive trade practices without your knowledge. It can also be the basis for business litigation if your partner withholds information from you that results in profits that should be shared. To learn more about the benefits and disadvantages of starting a business with another person, visit our website.

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