In this edition of 'It depends', special counsel Steven Jell talks about using partnerships as a business structure.
Video Transcript
Hi. Welcome to It depends. During this edition, we're going to talk about using partnerships as a business structure.
What is a partnership?
A partnership is a relationship between two or more people or entities, each expecting to share in the profits as well as losses of the business. A partnership is relatively easy to set up and quite cheap to maintain.
Is a partnership a separate legal entity?
So no, a partnership is not a separate legal entity that is distinct from its individual partners. This means that the personal assets or individual assets of the partners themselves will be at risk of being called upon to satisfy the debts of the partnership. For this reason, there are often other better structures for people looking to operate a business.
Do I need any documents to establish a partnership?
So, a formal partnership agreement, while recommended, is not necessary when operating a partnership. The partnership will be created when the two individuals commence operating the business together. So, by having a written agreement, it's much easier to determine the date that partnership was actually formed.
Is a partnership the right business structure for me?
So, it depends. A partnership has both its own benefits and downsides. Whether a partnership is right for you really depends on your own individual circumstances and the things you're looking to achieve.
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