If you’re planning on starting a business with someone else, forming a partnership formalizes each party’s contributions and entitles them to a share of the profits. Legal partnerships come in many forms, each with unique advantages and liabilities. While a business lawyer will help you decide which type is best for your situation, here are a few different options available to commercial enterprises.

What Types of Business Partnerships Can You Form?

1. General Partnership

This is equivalent to working under your own name as a sole proprietor. Each partner owns an equal share of the company, including its profits and financial liabilities.

While it has some considerable drawbacks, including personal liability for the business’s debts and lawsuits, it also has tax advantages. Since profits go to the individuals instead of the company, partners have lower tax burdens.

2. Limited Liability Corporation

A limited liability corporation (LLC) separates personal finances and company debts. Each partner owns a different percentage of the company, with profits distributed accordingly.

However, one person must accept financial responsibility for the actions of other members. Only this individual is allowed to make management decisions, but they can be held liable for any illegal behavior.

3. Limited Liability Partnership

In a limited liability partnership (LLP), each partner is only liable for their own actions. These corporate partnerships also eliminate the risk of losing your personal assets if the business has debts it can’t repay.

However, some states don’t recognize LLPs formed in other states. Some areas only make this type of partnership available to individuals in certain professions, like doctors, lawyers, and accountants. If you’re considering an LLP, a business lawyer will help determine whether you qualify.

If you’re starting a business anywhere in the Greensboro, NC, area, The Law Office of W. Randall Holcomb PLLC will guide you through the complex process of getting your company off the ground. Their business lawyers serve entrepreneurs in a broad array of industries and will give you the detailed legal advice you need. Visit their website to learn how they will help protect your investments, or call (336) 888-8760 to schedule a consultation today.