Before a business can get up and running in Pennsylvania, many important decisions must be made. Amongst those decisions is the one regarding the structure that the business will take. There are often advantages and disadvantages to each, and fully understanding them is imperative to making the right decision.
One option is to create a partnership. Perhaps the biggest benefit of a partnership is that it is easy to create. Generally, partnerships are created through a written agreement that spells out how the parties are supposed to act. Profits from a partnership should be equally divided. Although it can be easy to create and enter into a partnership, choosing a partner should be done so with care. This is because each partner carries equal authority to enter a business into contracts, including those that involve debt.
There are a number of disadvantages to partnerships. The biggest is probably the fact that partners are personally liable for the business’s debts. This means that in the event that a creditor is unable to recover debt from the business and its assets, that creditor may take legal action to obtain access to a partner’s personal bank accounts and other assets to settle the debt. This is scary proposition for many, and it usually turns them off to this type of business structure. There are ways to limit this liability depending on the type of partnership created, as there are a variety of partnership types.
This is merely a broad overview of partnerships. For some Pennsylvanians, the ease with which they can be created is quite appealing. For others, the drawbacks are too much to handle. Either way, those creating a business need to fully understand their options so that they can utilize a business structure that meets their needs and furthers their interests. For this reason, it is advisable to discuss the matter with an attorney who is experienced in business law. This ensures you are well informed before you make any decisions.