People in Florida who want to form a business may consider a number of different types of business structures. Some people may want to form a corporation or a limited liability company (LLC), while others may want to go it alone as a sole proprietor. Partnerships are one of the easiest and most common business forms, but there are a number of pros and cons for people to keep in mind if they are considering forming one. There are several different types, including general, limited and limited liability partnerships, and people may choose a partnership arrangement based on whether some people are contributing money only while others will actively manage the firms.
Although a partnership may appear to be a relatively quick and easy business structure, business owners may also want to consider some of the risks that can accompany this type of firm. In most cases, partners in a partnership have unlimited personal liability for the whole company. The structure does not provide the higher level of protection from debt and insolvency that may be found in a corporation or LLC. Partnerships have an inherently lower level of stability because the agreement is dissolved by default whenever one member retires, resigns or dies. Remaining partners will need to make a new agreement to continue, requiring a new business identity.
In many cases, members of a partnership may find themselves facing disputes and disagreements, especially if responsibilities are not carefully defined in the agreement. Since shares in a partnership are generally non-transferable without the consent of all members, it is important to plan for dispute resolution.
Some people may find that partnerships are still the best choice for their business, while others may want to explore a different corporate structure. A business law attorney may provide advice and guidance throughout the business litigation or formation process.