Why Partnerships Can Be Beneficial for Your Business

Posted by on Jan 12, 2021 in Legal News |

business planning

There’s no denying that 2020 was been tough on businesses. Nearly everyone’s business sustained some form of loss, and the governmental assistance, though helpful for many, could only do so much. Looking forward to the future, there is a light at the end of the tunnel. This means that it’s time to talk about things that don’t involve mitigating or preparing for disaster. 

Namely, this article will discuss partnerships. This structure might be beneficial for your business, and, if you think a partnership is something that interests you, you should contact an attorney about filing any necessary paperwork. 

What is a Partnership? 

A business partnership shares the business between multiple owners (two or more). The partnership is a formal arrangement by the parties to share the business’ profits and manage and operate the business together. In a partnership business, partners might share in the losses and profits together. Or, they might have limited liability. 

What are the Main Types of Partnerships? 

General 

General partnerships are the most informal arrangement that you can have in Florida. A general partnership means that each partner is personally liable for not only the debts of the business, but also the actions of their fellow partners. In Florida, it is not difficult to start a general partnership. Choose a business name, trade name, draft a partnership agreement and sign it, and then apply for the appropriate licenses, permits, zoning clearances, and EID.

Limited

A limited partnership is similar to a general partnership, though it does have a few distinctive features. For example, a limited partnership must have at least one general partner. This partner must be personally liable for the business’ debts and claims, and the GP must manage the business. Other partners can be “limited” partners, who contribute capital and investments to the business but are not involved in management. If the limited partner is not involved in management, they aren’t liable for debts or claims. 

Limited Liability

A limited liability partnership is often preferred by medical, legal, or accounting practices. These LLPs are distinctive because, though they have the same basic structure and tax advantages as other partnerships, they have liability protection. An LLP partner’s personal assets are protected if there are claims against one of their partners. An LLP partner is not personally responsible for their business partners’ actions. Though assets held in the partnership can be liable for claims or debts, the LLP offers more personal protection to its partners. 

Advantages of a Partnership 

A good partner can bring things that you might lack, including specialized expertise and cash. A partner also allows you to share the capital expenditures and expenses necessary for your business, lessening the financial burden on you. Additionally, a partner can provide access to new business opportunities and inroads with investors or communities to which you alone might not have been connected. 

There are tax advantages to certain types of partnerships. According to the IRS partnership page, a general partnership might not have to pay income tax, as it “passes through” its profits and losses to the partners themselves. Partners might be able to deduct certain business losses from their tax returns. Note: it is important to contact an attorney for more information on what, if any, tax benefits you can get through a partnership. 

Disadvantages of a Partnership 

As with anything, there are drawbacks, even in the face of benefits. A partnership does somewhat involve a loss of autonomy, as you now have to consult with another person about at least some decisions (especially true in a general partnership, where everyone’s involved in management). 

Also, a partnership entails sharing losses. Though LPs and LLPs prevent personal losses, there is still always at least some extent of loss incurred together. In the future, you could also have issues if you want to sell your business and your partner(s) refuse. 

Lastly, there is always the chance of conflict. Though states have some laws about this (in the event of fraud or “insanity,” usually), these regulations are only put into use in extreme situations. Bickering and disagreement could be enough to sink a business, but it likely won’t be actionable in court. Choose your partner wisely.

As you can see, a lot goes into a partnership, and this article serves as only a brief overview. If you’re feeling a little overwhelmed or confused by this information, that’s perfectly normal. Law isn’t easy, but, luckily, lawyers exist. If you want to learn more about partnerships, consider booking a consultation with an attorney to talk about your options and visit our website.

Read More

New Year, Old Habits

Posted by on Jan 5, 2021 in Legal News |

Well, we can finally say (with no small amount of relief) that 2020 is over! The bar is low, which means that all 2021 has to do is be better than 2020—an easy feat. Now that the New Year is starting, everyone is making New Years’ resolutions. Though these resolutions might be as simple as, “Survive,” they are still an important commitment to avoid falling into bad habits. Just making the resolution is the first step.

In this article, we’ll talk about some of the bad habits that often affect the legal aspects of your life, especially your estate plan. Being aware of these habits is the first step to changing them. 

Bad Habits to Watch 

Procrastination

Procrastination is a problem for a lot of people. It might be a small comfort to know that probably over half the population struggles with putting things off that they shouldn’t. In estate planning, procrastination can be really damaging. 

The damage in this field is caused by the fact that you can wait too long to do something. If you procrastinate on picking a power of attorney or setting up a healthcare directive, and you get sick, things will become much more difficult for you than they would have been, had you gotten around to it earlier. 

Here are five tips from Inc.com to beat procrastination: 

1. Start easy. That helps you build momentum, and you’re more likely to finish a job if you get over the beginning hump than if you never start at all. 

2. Break it down. Big tasks get easier when you disassemble them into smaller steps. 

3. Be nice to yourself. Strictness doesn’t always help—what’s done is done, it’s time to move on. Don’t beat yourself up for past procrastination.

4. Know “why.” Is there a particular reason you’re procrastinating this task? Getting an answer to that question might make it easier to finish. 

5. Be mindful. Don’t dwell on perfectionism or fear of failure. Doubt the doubts.

Don’t Ignore Your “Future Self” 

Particularly if you’re currently in good health, it can be easy to ignore a future where you are sick or bedridden. That is not a good idea. As 2020 taught us, you can’t disregard the unexpected by assuming it won’t happen to you. Picking a power of attorney and getting together an estate plan will benefit a “future” you…but that future you might not be so far off as you think.

“Wait and See” Attitude

A good example of this one relates to marriage and divorce. If you have an estate plan and someone marries into your family, you might decide to wait and see if the marriage works before you add them into your asset division. 

While that is a sensible approach, we have a word of caution. “Wait and see” can easily lead to forgetting or procrastinating. Ten or fifteen years down the line, you might forget that you planned to return to the estate plan, and that could leave your new family member in a bind. 

Not Taking Estate Planning Seriously

This habit is commonly seen among younger people. If you’re under fifty, you might view estate planning as something that’s only good for older generations. However, that’s not the case. As we have said earlier in this article, 2020 proved that anything can happen. Betting on your current healthy status is not quite such a sure thing as you may think. It’s best to spend the money necessary to meet with an attorney and get an estate plan together. This is doubly important if you have or are planning to have kids.  

DIY-ing It

Sites that allow you to fill out your own legal paperwork are, arguably, convenient, but are they accurate? The law is filled with little technicalities. On these websites themselves, they acknowledge that, often stating at the bottom (in small print), that they’re “not a substitute” for an actual attorney’s legal advice. 

These main bad habits might not be too hard to break, but, if you’re not aware of them, they definitely will be. In estate planning, these five are all too common. In 2021, let’s leave these back with the rest of 2020.

Want to learn more about planning? Visit our website and get more details. 

Read More