Who Is This Tutorial For:
Beginning or intermediate entrepreneurs who have considered establishing a business partnership and are looking for the procedures to create one.
What Is It About:
This tutorial outlines the general steps in creating a business partnership.
Where Can Resources Be Found:
Recommended resource is provided in this tutorial.
When Is The Best Time:
Learning the steps to form a partnership is best accomplished during the beginning stage of the business when you are clear about what you want to do with your business ideas.
How To Do It:
Read through as this tutorial provides the principal steps in forming a partnership.
Summary
A partnership is a single business where ownership is shared by two or more people. This relationship begins when two or more people decide to engage in a business together. Generally, each partner contributes in every aspect of the business – money, property and labor or skill in exchange for shares in the profits and losses of the business.
In this tutorial you will learn some of valuable insights on top of the general procedure in formalizing your planned business partnership as they are outlined as steps. Follow these steps when you’re serious about creating a partnership
Step 1. Brainstorm and discuss potential issues
This first step tends to be overlooked. It is important to remember that once you enter into a partnership, the decision-making process will entail more than just one person, which is why you need to discuss and be open about a variety of issues that will have a bearing in the success or failure of the business over the course of time.
Step 2. Create a partnership agreement
It is also critical that you develop a partnership agreement even if it is not legally required because this document will form the basis of your future business decisions including division of profits, dispute resolutions and change ownership (as in the case of bringing in new partners or buying out of current partners). This document should even have a provision for dissolving partnerships.
Step 3. Register your business
Registering your business with the state is your first step to formalize your partnership. Generally done through the Secretary of State’s office, take note of the Business Entity Registration page which contains the information on specific filing requirements in the state where your business will be formed.
Step 4. Establish your business name
Your legal name is the name given in your partnership agreement or the last names of the partners. In case you want to operate under a different name other than the one you officially registered, you will most likely be required to file a fictitious name which is also known as an assumed name, trade name or “doing business as” (DBA) name.
Step 5. Obtain licenses and permits
Regulations may vary by industry, state and locality for obtaining licenses and permits. Check with the appropriate agencies to determine such requirements.
Step 6. Hire your employees.
Read the tutorial on how to hire employees. It provides the general guidelines and steps on how to go about the process. Federal and state regulations provide guidelines when you’re hiring employees.
Partnership as a business structure combines resources of two or more people to realize the business as how it was envisioned. However, it is important to remember that businesses do not always run smoothly as all will be tested according to the challenges that the market unfolds. That is why this tutorial stresses the point that on top of the technical procedures that should be followed in formalizing the planned business partnership, extra care should be given to other matters like the details being stated in the partnership agreement. Although this is not principally required by registering business entities, its purpose serves to benefit all parties involved in the partnership.
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