When you do business online, you likely hear a lot about partnerships. Lots of people run their businesses online with a partner. It’s a great way to double your resources and do more with less. There are a few different types of partnerships that you can enter. It’s essential that whatever you choose, you do need a well-written contract to ensure that you are all protected.
- Joint Venture Partnership – This is a short-term partnership of two business owners who want to do something together. You see this sometimes with major corporations who are joining forces to get a message out or raise money for charity. You can also do it for short-term projects like a webinar, a seminar, a conference, a book, and so much more.
- General Partnership – This type of partnership isn’t very protective of personal assets, but it does spell out the rights and responsibilities (and benefits) of each partner. Law firms are often GPs, as are doctor’s offices. Often a GP can also be formed by two corporations.
- Limited Partnership – This is a lot like the JV agreement, but it’s what the legal document is called. An LP does protect the partners - other than the GP - against liability over and above their investment. However, they can void it if they step outside the bounds of the LP agreement.
- Limited Liability Partnership – This type of partnership limits the activity of the LLP and takes them out of the day-to-day contributions of the business. Often an LP is only an investor and only gets out of the investment their portion, if those who run it are producing a profit.
- Partnership – A basic partnership is when two or more people start a business together. This type of partnership offers no personal protection either, unless you have a separate corporation that joined the partnership to protect their personal assets.
While you should engage an attorney to help you create any legal documents, there are ways you can still help yourself avoid problems - at least a little - if hiring a lawyer is out of the question. Write a contract including a list of all responsibilities and benefits for each partner in the agreement. Spell out everything that is included and everything that is not included in the agreement.
This is called a memorandum of understanding and is something usually created before the contract. This can become a legal document when you both sign it. However, you are better off to take your memorandum of understanding that you both signed to a lawyer to create a legal contract from it. They will tell you anything you forgot to add that can protect you both, too.
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