area, she has more than 15 years experience writing about business, technology, and politics for newspapers, magazines and websites.
In the eyes of the law, by the very nature of entering into business with another party, you may be considered a partnership -- whether you have a written agreement or not. has been growing steadily by an annual rate of about 5.6 percent a year to more than 3 million in 2007, according to the most recent records reported by the U. With that much money at stake, it's important for partnerships to spell out what each person contributes, whether in terms of financing, property, labor or customers, and what each person expects in terms of profits and ownership.
However, it is highly advisable to use a formal, written partnership agreement to spell out how income, deductions, gains, losses, and credits are to be split.
If the agreement is silent, then state law is used to fill in gaps -- and that could leave a lot of decisions up to the courts if you and your partner(s) have a falling out."Legally, you're not required to have a written partnership agreement but I think you're a fool not to have one," Ennico says.
But, sometimes, such relationships can sour, the business can fail, and the parties can decide to go their separate ways. The total net income for these partnerships has also been on the rise, increasing by 2.5 percent from 2006 to a total $683 billion for 2007, IRS figures show.
Her work has appeared in such publications as When two or more people start a business or carry on a trade together to turn a profit, the result can often be a strong union that blends complementary skills, financial resources, customers and connections to help the venture succeed.
Dig Deeper: 10 Questions to Ask a Potential Business Partner Structuring a Business Partnership: General or Limited? "The plan serves as a roadmap for the partnership to implement actions necessary to start up and grow the company," Weltman says.
"It also is useful in making you focus on various aspects of the business, such as where you plan to obtain start-up capital and whether you will be selling through the Web." A business plan should describe the responsibilities of each partner for the business, including who will be the head or managing partner.
"The following pages will cover the benefits and disadvantages of a partnership, how to structure a partnership in a written agreement to protect yourself and the business, and steps you need to take in forming a partnership. Once you have an idea for a company, whether this means selling a product or a service, understand the consequences of opting to become a partnership.
As a business partner, you need to be prepared to devote time, use business methods, and get set up properly so you can make more money, minimize taxes, and generally avoid potential problems.