Business Partnerships: The Upside and the Downside 

When you start a business with a couple more people, perhaps your friends, they become your business partners. Therefore, it seems logical to create a business partnership contract. When you share a partnership of a business, you are not the sole owner of the organization; you have to share ownership with the others as well. While some people like it, others do not prefer this. 

If you are considering starting a business and are wondering whether you should share a partnership with other people, it may help to consult with an Olympia, WA business formation attorney. Knowing the advantages as well as the disadvantages of having business partners can help you make the right decision. 

Advantages of a business partnership 

  • Bridging the gap in expertise and knowledge. 

Partnering with someone equally enthusiastic and talented in the business field can help you grow your business. For example, you may be great at generating new ideas, but your business partner may know how to sell them better. 

  • Sharing the workload. 

You can share the workload when you establish a business with at least one more person. Sole owners of businesses usually have a lot on their plate, especially during the initial days. Sharing tasks can help them get done quickly. 

  • Less financial burden. 

Starting a business requires a huge capital investment. A business partner can ease your financial burden by splitting the expenses, including inventory, retail space, equipment, staffing, etc. 

Disadvantages of a business partnership 

  • Shared liability. 

Just like you share profits in a business partnership, you’ll have to share losses and liabilities as well, even if the other business partner causes the loss. Regardless of which partner incurs them, all partners must pay for business debts equally. This can become a burden to your personal finances. 

  • Making joint decisions. 

You cannot make individual choices when you are in a business partnership. You’ll have to discuss your decision with your partner before finalizing it. Even if your partner does not see the profit or benefit in your decision, you’ll have no choice but to respect what they say. 

  • You will have to pay taxes individually. 

There are both advantages and disadvantages to being taxed individually in a business. General business taxes are lower than individual taxes. If you owned the business all by yourself, you would be paying much less compared to the total amount you and your business partner(s) pay individually.  

These are some pros and cons of having partners in a business. As you can see, a business is a challenge regarding the option you choose. With due diligence, you can overcome the cons and work out a business partnership. Ultimately, it depends on what you are comfortable with.