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Things to consider before entering into a partnership

If you are looking to start a business in Pennsylvania, you may be thinking of getting a partner. While entering into a partnership can be very beneficial for both parties, it can also be a disaster if both sides are not on the same page. Ask yourself and your potential partner some hard questions before making it official.

Score.org discusses some of the benefits of taking on a business partner. These include:

  • Shared risk in the business
  • Split tasks and responsibilities
  • Increased access to professional expertise and financial backing

While these are potential advantages, you should make sure the partner is bringing something to the table you are not. This may be money or certain business knowledge. While the partner does not need to be a good friend, you should take the time to get to know him or her so you understand what expectations each of you have. 

Get ready to have difficult conversations. Decide how the business is going to pay each of you and what percentage of the profits you each receive. You also need to decide which legal partnership to enter into, as each has its own tax and profit implications. Once you decide both of you would like to become partners, make it official by writing up a partnership agreement that lays out all the details and outlines how to resolve issues.  

Entrepreneur points out you should first ask the most important question, which is 'do I even need a partner?' If you can do things on your own or have enough money to pay an employee, it may be better to keep 100% of the business for yourself.

 

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