Business partnerships

In some ways, Partnerships and Joint Ventures are similar. Both aim to earn a profit and share the burden of losses. However, a Joint Venture is composed of one or more separate entities who join together for a specific purpose and often for a short period of time. Whereas, a partnership is a business entity with two or more owners.

Joint Ventures are often formed to increase market reach, share technologies and research, share the risk, or increase production volume. For example, a US-based software company could choose to work with a Mexican software company to help them expand into the Central American market. An example of a Partnership is two persons who choose to start a company together where each has defined roles and contributions written into the agreement. For example, they open a car dealership, each contributing $100,000, and one is leading the sales department and the other the service shop.

A silent partner is still an owner of the business and part of the business entity; however, their main contribution is funding. They do not usually make operational decisions, hire employees, head marketing campaigns, manage sales, or any other type of non-monetary business contribution. Silent partners are mostly hands-off owners, but they may act as consultants or may attend a few meeting if needed. Sometimes silent partners are called money partners or simply investors since their primary role is to provide funding; however, there are distinct legal differences between an investor and a partner so it would be beneficial for you to consult with a lawyer to make sure you keep the distinctions straight before you add a silent partner to your business.

How to get out of a business partnership is often written into the Partnership Agreement. If it is, you must follow the terms of the agreement, which means you may need to sell your portion of the business to your other partners, or it may mean selling your part to an approved new partner. You and your partners may also decide to sell the business in its entirety.

Or, you may be looking to dissolve the partnership. If you and your partners decide to dissolve the company, you'll need to make a dissolution plan. The plan should include a timeline with associated dissolution tasks.

In addition to filing your dissolution with your state, you'll also need to consider:

• Company debt and how debt will be paid off
• What equipment or assets can be sold and where those funds will go
• When to close business bank accounts and credit cards
• How your last tax filing will be managed
• How remaining assets will be distributed, including intangible items like client lists
• When and how to notify stakeholders such as clients and vendors