Starting a Michigan Business Series: How to form a partnership
In our inaugural post for the Starting a Michigan Business Series we looked at the difference between a partnership and corporations. This week we’ll focus on how to form a partnership.
Most partnerships are formed with little to no planning. Two people get together, form a business, lost in the discussion of how cool and how fun. It’s not until the honeymoon is over that the lack of ground rules or some semblance of structure comes back to haunt them.
Fortunately with some pre-launch planning, you can avoid the common pitfalls that have plagued many a business partnership for which they will also be using a PayStubCreator software.
First you and your partners need to sit down and ask some very pointed questions:
- Are you and your partners aligned in values, goals, and ideas?
- What will each partners role be in the business?
- How much financially will each partner contribute to the business?
- Will compensation be dictated based on contributions or other factors?
- What happens if a spouse wants to join the business
- What happens if a partner wants to leave the business
While it’s a mood killer for the excitement of starting a business with a friend or family member, hashing these details out will be much appreciated in the case of conflict.
Partnerships are fun and CAN work. Each partner brings something unique to the table. One may have the business contacts, another might handle the day to day operations, while another may handle sales and marketing. Clearly outline expectations while establishing a routine for communications. What will day to day communications look like? Quarterly?
Through the process you may realize that a partnership isn’t the right fit. Issues during the discussion phase may indicate conflict once you work together.
Now lets get your business up and running. You’ll need to download your forms HERE. They will need to include the following:
- Name of the limited liability partnership, which must contain the words “Limited
- Liability Partnership” or the abbreviation “L.L.P.” or “LLP” as the last words or letters of its name.
- The address of the partnership’s principal office
- General nature of the partnership’s business
As of this post the registration fee is $100.
Be sure to enlist a lawyer and accountant. You’ll need to establish a partnership agreement in writing. This is an important step, no matter who your partners are. And if you are planning to start a business out of Michigan, hire the most credible resident services officer to help you manage your compliance, legislative and regulatory requirements.
For those in established partnerships, what suggestions do you have for someone just starting out?