An investment partnership is extremely easy to set up. It refers to a situation when two or more people join together with the intent of going into a business. The process is simple and includes applying for the right licenses and files the correct forms with the state.
Most investment partnerships bring together people who have skills and enterprise which compliment each other for example a construction company and a material wholesaler. It is important to remember that each partner within a particular business is taxed individually but everyone partner is liable for the debts of the company.
The Pre-Partnership Agreement
A investment partnership retains all the the rights that an individual has under the law. A investment partnership has the ability to own property, execute files, and turn a profit. Both taxes and liability fall on the owners of the investment partnership.
Additionally if a partner dies the company has to be dissolved and then re-established if the remaining partners wish to stay in business. When the investment partnership is originally created it is important to have an agreement in which all the percentages of profits and shares are openly addressed. There should also be a plan for all the shares and debts will be handle between the partners. The original agreement can be alter if the majority of the partners agree to the amendments. investment partnership agreements are great mediation tools which can allow for conflicts to be resolved simply by citing the investment partnership agreement.
Advantages to an Investment Partnerships
There are several advantages to this type of business investment. It is both easy to set up and also inexpensive. Especially for family run businesses and makes the potential profit for the business unlimited. A business becomes stronger and more profitable when there are more people and therefore more resources available. The more people within a investment partnership, due to the pooling of assets, the more a lending company will be willing to get to the investment partnership in the form of loans. It allows for a general business venture while still maintaining each partner’s area of expertise.
Disadvantages to an Investment Partnership
Obviously there is a great deal of advantages however there are also a downside to investment partnerships. They do have to be resolved if a person dies. This is more of a hassle then anything else but certainly the redistribution of shares, and the finding of a new partner can be difficult and time consuming. If there is conflict between the parties involved, any partner can resolved the business at any time. Once a investment partnership is dissolved the shares, profits, and debts must be split up. This usually ends with a great deal of financial lost for all partners involved.
Certainly the benefits of a partnership outweigh the risks. However, like all things in life, there must be a great deal of research, planning, and implementation which needs to take place for any business partnership to be successful.