Virginia recognizes a number of different business structures that individuals may use when they set up their new entities. From the simple sole proprietorship to the more complex S-Corporation, there are a myriad of structures that individuals may assess before they select the ones that will serve their business’s needs. This post will offer information on one popular form of business structure – partnerships – that readers may wish to pursue. However, readers should seek their own legal guidance before committing to a business structure as this post does not provide any legal advice.
A partnership is a business that is owned by more than one person. The partners to the business venture may decide how they will share the costs of running their business, how they will distribute the profits of their efforts and how they will manage any liabilities that their business acquires. Partnerships are not taxed as separate businesses entities, and therefore the money that partnerships make is taxed through the partners’ individual income taxes.
Partnerships do not generally protect the owners of the business from the liabilities of their entities. For example, if a partnership is sued for failing to follow through on a contractual obligation, the partners who own the business may be individually liable. Readers should have a full understanding of their responsibilities under a partnership before they commit to creating one.
Partnerships are easy to set up and relatively straightforward in terms of their management and administration. As with all business ventures partnerships can be wrought with problems if the parties who create them do not find common ground regarding their business’s management. Legal consultation can help those who need more information on business formation and partnership creation.