If you are starting a business, you must make the decision about whether you will be operating as a sole proprietorship, LLC or partnership. Each business model has its own benefits and drawbacks. However, you should also keep in mind that variations exist within each business model. If you are starting a partnership, you have a few options for the type of partnership that you can pursue. Here is more on the different kinds of partnerships and what you’ll need to get started:
General Partnerships: In this case, partners agreed to work together and share the burden of responsibility for the company, but are taxed separately. While corporations are taxed on both company and owner profits, partnerships are not taxed as a company. The single taxation model enjoyed by partnerships is a major benefit.
Limited Liability Partnerships: These types of partnerships enjoy the tax benefits of standard partnerships, but also give you the protection of limited liability. For instance, if one of the partners is sued, you will not be help personally liable and in turn, cannot be sued or held accountable for your partner’s mistake.
What You’ll Need to Get Started: Once you and your partners come to an agreement about the type of partnership that you’d like to pursue, you will need to file the appropriate paperwork. Fortunately, you can do a bunch of documents including your tax number online. To apply online for a Tax ID number, you’ll need to have already filled as a partnership on a federal and state level. You also have the option of applying for your ID by fax or mail, though you could wait up to four weeks for a response.
Ultimately, the choice of partnership type should benefit your business and increase the growth of your company.