You also need to be able to get along with any partners you choose.
Starting a business is always exciting. But sometimes, the venture is too big to handle alone. As a result, you may be contemplating bringing on one or more partners to help your new company succeed. If you’re thinking about forming a partnership, these initial considerations will help you get started.
Selecting the Right Partner or Partners
Selecting your new partner or partners is the most crucial step. You want to make sure that anyone you allow to join your company’s management shares your goals and vision. However, you do not want to find people just like yourself. It would help if you had people who would complement your weaknesses and appreciate your strengths.
For example, you may have developed advanced digital skills during your career but lack the confidence to sell your ideas to groups or financial institutions. In this case, you would look for someone who speaks well and doesn’t suffer from stage fright.
Of course, finding someone with just one strength you lack is insufficient. Ideally, you will look for partners that shore up your shortcomings in several areas and have deficiencies in their skill sets that you can help balance. You also need to be able to get along with any partners you choose. You will likely share many stressful times as your business is getting started. Make sure your temperament matches your partners’ and that you will be able to communicate even when things are not going well.
Creating a Partnership Agreement
Once your partners are selected, the next step is to define each partner’s role within the organization. Finally, you spell this information out in a partnership agreement, a legal document that explains every aspect of the business relationship. Once completed and approved, a partnership agreement becomes a legally binding document. In the beginning, you will use it as a blueprint to communicate how you will structure your partnership. The paper covers the expectations of the partners and their respective responsibilities.
Document all pertinent details concerning each partner’s contributions to the business and financial reward. Try not to leave anything out concerning what the other partners expect from each business owner. Include any special arrangements, reasons for ending the partnership, and acceptable performance and behavior levels.
Later, if you run into trouble with one of your partners, you can refer to the partnership agreement to determine what action you need to take. Therefore, it is essential to detail the contract comprehensively. Once you form a partnership, you are bound to the other partners, so every aspect of the business relationship must be spelled out in the agreement.
Making the Partnership Official
Now that you have defined the roles of the partners, it is time to officially form the association as a legal entity. You do this by registering the partnership with your state and any states you plan to conduct business. Your partnership will also need a tax number so the business can pay taxes as an entity. The IRS website has information about applying for an EIN, the type of number you need to be assigned to your business to qualify as a taxpayer. Next, you need to open a business bank account in the partnership’s name and decide on an accounting method to keep the books. Now, you can start the day-to-day operations of your business as a legal business partnership.
A partnership is an excellent way to jumpstart the business startup process. Injecting other individuals to help advance the business helps keep motivation high for the company’s success. Carefully choose your partners and define each partner’s role. You will then be ready to enter the business arena with a firm footing and a good start.