If you have decided to start your own business, one of the most difficult parts if that process is choosing what type of business to form. Many business owners decide to form a partnership, or a business run by two or more people who share profits and losses.
There are two main types of potential partnerships: general and limited.In a general partnership, both partners are personally liable for the debts of the business.In a limited partnership, there is a general partner and limited partners, and only the general partner is responsible for running the business on a day-to-day basis and personally liable for business debts.
Partnerships are advantageous to Texas business owners in many ways. Forming a partnership does not require you to file any paperwork or pay any fees. Sharing equal control and decision-making power with other people can also be beneficial for all parties and the business as a whole.
However, there are also some downsides. For example, if the business assets cannot cover the business’ debts, creditors can go after the personal assets of the general partner or partners. It can also be difficult to clearly define the responsibilities of each partner, which may cause disagreements within the business. It can also be difficult to transfer your share of the business to someone else, and all too easy to shut the business down if someone leaves the company.
Every business entity has its pros and cons. An attorney specializing in business formation and planning can help you decide if a partnership is the best option for your business.