Trying to figure out which Illinois business structure to utilize when starting a business can be stressful and frustrating. One can easily become confused by all of the advantages and disadvantages posed by each structure type. However, one should not become overwhelmed. By working closely with a skilled business law professional one can ensure that they are making the right legal and business choices to further their interests.
Obviously, one way that an attorney can help is by fully advising of the advantages and disadvantages of each structure type. This week, we are going to briefly look at partnerships. Generally speaking, a partnership is created when an agreement between multiple parties is made to enter into a business. Most often, these partnerships are guided by partnership agreements that layout the obligations and responsibilities, as well as the payouts, to each partner.
As simple as that sounds, there are actually multiple types of partnerships. The main difference between them is how liability is handled. In a general partnership, for example, all partners are equally responsible for all legal and financial liabilities. That means that if a lawsuit brought against the business and the business does not have the assets to cover any judgments, then the partners will all be equally responsible for that judgment. The same holds true for any outstanding debts. This is why many people choose a limited liability partnership. This type of partnership limits the liability of partners in that they cannot be held personally liable for any wrongdoings of another partner. This type of partnership is often seen in businesses such as law firms.
These are just two of the types of partnerships available to those looking to start a business. There are others that we do not have time to discuss in this post. Also, it is worth noting that there are other requirements that must be met in order to create and maintain a partnership. Therefore, if one has questions about whether or not a partnership is right, or about how to start a partnership, then it may be time to sit down with a trusted business law attorney.