Are You Going to Need a Partner for Your Small Business?

It's safe to say that starting a small business is a life-changing decision. While many individuals prefer to build a business from the ground up by themselves, others choose a partner that they can rely on in order to fulfill their entrepreneurial dreams. If you're someone who is planning on starting a small business, you might want to consider bringing a partner on board.

A business partnership is basically the alliance of more than one entity--whether it be your best friend or another company--in owning an establishment. If, for example, you are planning on partnering with a friend to start a beading business, the two of you will be responsible for the endeavor together.

Of course, there are different kinds of partnerships. If the sole reason for your search for a partner is for extra capital, you might want to simply look for a limited partnership, which allows investors to contribute money to your company. Having said that, this type of investor often has much less responsibility, so it's important to seriously think about your decision before embarking on a course of action.

If you're looking for a partnership in which you truly will be sharing responsibilities, it may be best to choose an individual that shares your goals. This is one of the key factors in creating a successful relationship in order for your business to succeed. Before solidifying your partnership, you need to have a purposeful conversation--where do you both see the business in a year? In five years? Do you have the same goals? These are some basic questions that you have to ask yourself before signing on any loan application's dotted line together.

Is a partnership the right choice for you and your business.

Besides having similar visions for the future and success of your business, both of you also need to agree on your roles in the company. Are you going to structure your organization in which both of you are presidents? Who is going to be responsible with accounting or merchandise? This is the time when your strengths and weaknesses come into play. The best kind of partnership allows each individual to shine and make use of their talent. If you have a degree in marketing and your partner is a math genius, why should you be handling the budget? It all boils down to how much you are willing to trust your partner in their role.

Once you and your colleague have agreed to all of these arrangements, put it all down on paper. When creating your partnership, you are actually not legally required to have a written partnership contract. However, it's important to draft an agreement that will bind both parties to some form of rights and responsibilities, as well as profit-sharing arrangements, in case anything goes awry.

If this all sounds appealing to you, then a partnership may just be the right course of action in order to see your business blossom. Of course, just like any other business, a partnership also needs to meet the same local registration requirements for you to start. The majority of cities around the country require businesses to register and pay minimum tax. You will also need certain licenses, as well as zoning permits and other agreements deemed necessary for you to successfully run your establishment. Additionally, you and your partner should make sure to register a business name, which can be accomplished with a quick trip to your county clerk's office.

It may not be an ideal situation, but in case the partnership does falter, you need to have a backup plan. There are many reasons for a relationship to dissolve--for example, you and your colleague may soon discover that you don't meet eye-to-eye with what your goals are for the company. Another reason may be because of a duo's inability to get along--a situation that is especially unfortunate when it happens to family members.

In the end, your partnership will only work if there is a certain level of trust between you and your partner. Just remember that it's the two of you who own the company and you will need to work together in order to see your business thrive.