As an entrepreneur, you take a risk by starting a business. Sometimes, this risk is shared through a business partnership. Business partnerships are formed by an agreement between two or more individuals to carry out a business as co-owners. Partners share all the ups and downs that the business brings along; they combine their resources to form a business and agree to share risks, profits, and losses.
Deciding about a partnership should not be taken lightly. Firstly, ask yourself if you really need a business partner for your new venture, because generally, when you have the full control of your business you are more prone to succeed. That is why a business partner should be chosen wisely; look for common vision and aspirations, energy output, strengths and qualities that complement your own ones, trust, background history and work experience and so on. There is a lot of groundwork and due diligence to perform before committing to a business partnership.
There are however several advantages when you’re in a business partnership, such as a stronger financial position when all parties invest and contribute to the business; a broader network of contacts and connections readily available to expand your network and build relationships; and brain trust by sharing knowledge and skills to the benefit of the business.
Some disadvantages on the other hand are loss of full control on the business which means there might be some adjustment time until all business partners get used to each other; risk of instability when the business partner potentially withdraws from the business for various reasons; and potential for conflict when opinions differ.
What makes a business partnership successful?
Professionalism, trust, experience, and discretion can make or break a partnership. A strong partnership is also based on a solid partnership agreement, outlining duties and responsibilities of all parties involved and the specific roles taken within the business. It’s important to note a business partnership should be registered to become a legal relationship, and this is done through registration with the Malta Business Registry (MBR). The deed of partnership needs to include the following:
- Name of partnership
- Share capital which is normally listed as ‘Contribution’
- Name, residential address and identification document number of partners
- Registered address
If you are thinking about forming a business partnership, here at Fairwinds Management Limited will be able to assist you in all the necessary legal and accounting steps and procedures to get your business started. Contact us today: email@example.com
Article written by Charlene Sciberras and originally published here: https://fairwindsmanagement.net/committing-to-a-business-partnership/