Business formation can certainly have its challenges. You may have a specific idea of how you want to run your future company, but you may also have concerns about the best way to get off the ground. You may even wonder whether going at it alone is in your best interests.
You may be considering enlisting a co-owner or partner in your business venture. This type of ownership structure can certainly have its benefits, but some downsides also exist. As with any business decision you make, now or in the future, thoroughly reviewing the option is worthwhile.
Co-ownership pros and cons
One reason that you may consider a co-ownership or partnership is that you will not hold the sole financial and legal responsibility of the company. Many people have financial difficulties that hold them back when trying to start their businesses, and having another person’s resources available could help lessen that burden. Additionally, having a partner could allow for a greater distribution of obligations and responsibilities.
Sharing the load also means sharing the benefits. If you have an equal partnership, you and your co-owner could receive equal shares of the benefits. On the other hand, you may take on more obligations and feel that you should receive a larger portion. It is important to get such terms down in a contract so that neither party is surprised by the division of assets and liabilities.
What if it doesn’t work out?
As with any relationship, a chance exists that the co-ownership may not prove as fruitful as you once hoped. Your partner or co-owner may not feel as dedicated to the business, and as a result, operations could suffer. In some cases, conflicts could arise that you could also resolve as per the terms of your contract. In other cases, the difficulties may prove substantial enough that legal steps to dissolve the partnership are necessary.
If you do have an interest in co-ownership, you may want to make sure that you have the right information. Consulting with a business law attorney could help you understand this and other business formation options. Your legal counsel could also assist you in drawing up contracts and with handling disputes that may come about in the future.