What if I Want to Form a Partnership?
Generally, any two or more individuals who agree to contribute money, labor, property, or skill to a business, and who agree to share in profits, losses, and management of that business are considered to be a partnership. You can choose to have a general partnership or a limited partnership.
For a practical matter, it makes sense to have a written Partnership Agreement formed which spells outs basic issues such as:
- How much and what kind of property each party will contribute
- What value will be placed on the property
- How profits and losses will be divided
- When and how profits will be withdrawn
- Whether or how certain partners will be compensated for their services to the partnership or for making capital available to the partnership
- What happens when changes of an interest in the partnership occur
In the case of limited partnership and limited liability companies, an Operating Agreement must be formed to address the above-referenced issues as well as many other issues.