You must also be able to get along with the partners of your choice.
Starting a business is always exciting. But sometimes the business is too big to handle alone. Therefore, you may be considering bringing in one or more partners to help your new venture succeed. If you’re considering forming a partnership, these initial considerations will help you get started.
Selection of the appropriate partner(s)
Selecting your new partner(s) is the most crucial step. You want to make sure that anyone you allow to join your company’s leadership shares your goals and vision. However, you don’t want to find people like you. It would help if you had people who would complement your weaknesses and appreciate your strengths.
For example, you may have developed advanced digital skills during your career, but lack the confidence to sell your ideas to groups or financial institutions. In this case, you would be looking for someone who speaks well and doesn’t get nervous.
Of course, finding someone with just one strength that you lack is insufficient. Ideally, you’ll be looking for partners who address your shortcomings in multiple areas and who have gaps in their skills that you can help balance out. You must also be able to get along with the partners of your choice. You will probably share many stressful moments when starting your business. Make sure your temperament matches that of your partners and that you will be able to communicate even when things are not going well.
Creation of a partnership agreement
Once your partners have been selected, the next step is to define the role of each partner within the organization. Finally, you specify this information in a partnership agreement, a legal document that explains all aspects of the business relationship. Once completed and approved, a partnership agreement becomes a legally binding document. At first, you will use this as a template to communicate how you will structure your partnership. The document covers the expectations of the partners and their respective responsibilities.
Document all relevant details regarding each partner’s contributions to business and financial reward. Try not to leave anything out regarding what other partners expect from each business owner. Include any special arrangements, reasons for ending the partnership, and acceptable levels of performance and behavior.
Later, if you are having difficulty with one of your partners, you can refer to the partnership agreement to determine what action to take. Therefore, it is essential to detail the contract comprehensively. Once you form a partnership, you are bound to the other partners, so every aspect of the business relationship should be spelled out in the agreement.
Formalize the partnership
Now that you have defined the roles of the partners, it is time to officially incorporate the association as a legal entity. To do this, register the partnership with your state and any state in which you plan to do business. Your partnership will also need a tax identification number so that the company can pay taxes as an entity. The IRS website has information on applying for an EIN, the type of number you must assign to your business to qualify as a taxpayer. Next, you need to open a business bank account in the name of the partnership and decide on an accounting method for keeping the books. Now you can start the day-to-day operations of your business as a legal business partnership.
A partnership is a great way to jump-start the business start-up process. Injecting other people to help drive the business forward helps keep motivation high for business success. Choose your partners carefully and define the role of each. You will then be ready to enter the business arena with a solid foundation and a good start.