Sunday, December 10, 2017
Email

Frequently Missed Deductions

Moving Expense for First Job

Twitter Facebook Linkedin Linkedin Google

Follow on Facebook

Best Accountants in Atlanta
A Lawyer's Advice on Business Partnerships
Oct 14, 2010

One of the biggest stumbling blocks for startups is properly structuring partnerships. Here is the outline of the following essential partnership issues:

Start with the end. Decide from the outset of your business what will happen if one partner exits. "This is one of those things most people never think about, but it's the most important, kind of like a pre-nup in a marriage," Gerber says. Think through the common reasons a partnership might break up: One partner might quit or need to take a job elsewhere; one might die or become ill and unable to work; there might be a dispute over finances or policies.

An operating or shareholders agreement should address all the possibilities and spell out the results of each scenario. Will the remaining partner retain ownership of the company? Will there be a buyout of the exiting partner? Under what terms? Having a legally viable exit plan before it is needed, and before emotions or animosity are running high, is invaluable.

Decide who decides. Put into writing how your company will be governed. Many times, partners share investment and responsibility equally and agree to decide major issues jointly. Other times, a majority or founding partner has ultimate control over the future of the company, while a junior partner reserves the right to veto major decisions, such as selling the company or bringing on a new partner. Whatever works for your firm, putting it in writing up front, Gerber says, can spare major confusion and grief in your day-to-day operations.

Protect the personal. Establish your partnership as a legal entity from Day One and protect the partners from personal liability. You also should address how profit will be split and how partners will be paid. There's a world of variation here, from a 50-50 revenue split to each partner getting base compensation and then some kind of profit split. Again, deciding early on is key to operating a successful partnership.

Assess your commitment. Everybody in a partnership starts with ideas about their commitment, but sometimes life gets in the way. Talk out competing priorities—children, extended family, other business interests—with your potential partners before you start working together. You should have strong common understandings going in about what will happen about possible maternity or paternity leaves, or if someone in the family gets sick and a partner needs to take care of them. You may agree to write formal policies covering these issues or not, but knowing how they'll be handled if they arise creates a sense of fairness and trust that gets a partnership off to a strong start.

Identify a legal adviser. Even if you've done conscientious prep work, there are a whole host of issues that can derail a partnership. Having an established relationship with an attorney can help, whether you need occasional advice, one-off representation, or decide to retain a lawyer as full-time or part-time counsel as your business grows.

 

Clients Feedback

"Nicholas is an extremely skilled accountant. He knows just how to guide his clients in the most advantageous ways and is adept at dealing with the IRS. He is highly respected. I recommend him highly."

 

- Robert B. Anderson, Alpharetta, GA

 

You can find what our others are saying about Atlanta Tax & Accounting HERE!

Home Tax News Economic Stimulus Plans 2009 A Lawyer's Advice on Business Partnerships
Snellville 1099MISC Help, Decatur 1099MISC Help, Doraville 1099MISC Help, Atlanta 1099MISC Help, Tucker 1099MISC Help,
View all articles
Atlanta cpa, cpa Atlanta, Roswell cpa, Atlanta accounting, Lawrenceville cpa, accounting Atlanta, Alpharetta cpa, Lawrenceville accounting, Marietta cpa.
Norcross accounting, cpa Marietta, Norcross cpa, Roswell accounting, cpa Norcross, cpa Cumming, Decatur cpa, cpa Lawrenceville.
Copyright © 2017. CPA Taxation. Web Design & SEO Plans
by Nicholas Trishin
770-685-2500