How can I structure my business if I’m in a rush to open?
You and a colleague have a great idea for a business, and you want to hit the ground running. While you should not rush establishing a business, one business structure that is relatively uncomplicated to form is a partnership.
What is a partnership?
A partnership is a business structure in which two or more people agree to co-own the business, sharing management of the enterprise and splitting profits. There are two basic types of partnerships: general partnerships and limited partnerships.
In a general partnership, all partners are equally responsible for the operations of the business and all partners assume liability for the debts and obligations incurred by the business.
In a limited partnership, some partners are general partners and others are limited partners.
The general partners are responsible for business operations. They equally own the business, and they all assume liability for the debts and obligations incurred by the business.
The limited partners do not have any control over the business operations. They are essentially investors in the business. Thus, they do not assume liability for the debts and obligations incurred by the partnership.
How to establish a partnership
Partnerships in Texas can be established relatively quickly. You do not need to register a partnership with the state or pay formation fees. You just need to open your business with your partners.
Perhaps the lengthiest part of establishing a partnership is drafting the partnership agreement. A partnership agreement outlines how the business will be shared between partners, how business decisions will be made, how disputes between partners will be handled and how a buyout will operate should a partner choose to leave the enterprise.
Those who are eager to open their doors to the public may choose a business structure like a partnership. Starting a business can be exciting, but you do not want to rush the process. It is essential that all the proper steps are taken to avoid problems down the road.