Are You A Partnership

{You and your spouse own a business venture together.}  {The assumption is that the owners have not filed any official business entity formation paperwork.} {Most of the time, you and your spouse do not have a Sole Proprietorship.}  {A sole prop is a single, or one person-owned business.}  {Since there are two persons who own your business, you have a partnership.}  {But remember there are always exceptions to the Internal Revenue Service (IRS) regulations that govern our tax law.}

Two or more persons forming a venture for profit is termed a partnership.  If the agreement is verbal, it is usually not enforceable in a court of law.  The dilemma is who are you going to believe when there are two or more different stories.  You would be well advised to have the agreement written out on paper.  If money is an issue, there are documents preformatted on the internet to use as a start.

Unlimited liability is the next concept to know when dealing with partnerships.  If you do not form a special type of partnership, you and your partners are referred to as general partners.  Basically, if either general partner is the source of a business lawsuit and loses, all the other general partners are jointly and severally liable for the resulting debt.  In short, you have just lost your personal house and vehicles due to something your partner did.

{Each state has differing laws governing what type of partnerships may be formed.}  {Generally, the partnership is formed in the state it will be conducting business.}  {A Georgia formed general partnership that plans to do business in Tennessee will need to check their laws.}  {Most of the time, Tennessee will require the Georgia formed partnership to register as a foreign partnership in Tennessee.} 

{When forming a partnership, you may also have limited partners who have limited liability.}  {The limited partners are only liable for their contribution into the partnership.}  {Protection begins with knowing the rules of the game.}  {Become familiar with your state of choice rules.}  {Many states offer a limited partnership option comprise solely of limited partners.}  {And often times other entities like corporations may be one of the partners}