PartnershipsTodd KirkVince Eisinger

OVERVIEW

Dangers of a Partnership• Partnerships Can be Formed with a Handshake

– Only Entity that can be formed by a verbal agreement

• In a partnership you are subject to unlimited liability–  A partnership usually may not sue or be sued in its own

name. The partners must sue or be sued. –  A partner may not sue his partners. His sole remedy is

to seek an accounting between the partners. 

• Divided power• No one will want to give you capital• Usually no life beyond the death of a partner

LLC

YouMe

Equity Fund

Limited Partners

Private Equity

(General Partner)

Joint Venture

Company BCompany A

THE PROCESSHow to forge a strong partnership

Choose the Right Partners

Consider Other Legal Formats

LLC

Limited Partnership

S-Corp

Create a Formal Agreement

Fulfill Other Legal Requirements

KEYS TO A SUCCESSFUL PARTNERSHIP

Get the Agreement Right

Get the Agreement Right

1. How will the ownership interest be shared?

2. How will decisions be made? 3. When one partner withdraws,

how will the purchase price be determined?

4. If a partner withdraws from the partnership, when will money be paid? 

Don’t just partner with someone because you can’t afford to hire them

Never split your company 50/50

Maintain Your Relationship

Online Resources

• corporations.utah.gov/business/genpart.html• Onecle.com• http://www.irs.gov/businesses/small/article/

0,,id=98214,00.html

References AllBusiness. (2011). Top 10 Mistakes Businesspeople Make When Forming Partnerships. Retrieved March 19, 2011, from AllBusiness.com: http://www.allbusiness.com/business-planning- structures/business/4009-1.html

Burns, S. (2011, March 21). Family Partnerships. (V. Eisinger, Interviewer)

Finkel, D. (2011). The 30 Key Questions to Ask Before You Form Any Partnership. Retrieved March 19, 2011, from AllBusiness.com:

http://www.allbusiness.com/company- activities-management/company-strategy/11480377-1.html

Mould, C. (2011, January). S Corp. vs. LLC: Which Structure is Right for Your Business. Retrieved March 22, 2011, from PowerHomeBiz.com: http://www.powerhomebiz.com/vol136/structure.htm