Alternatives to a Partnership in Your Online Business

What are the alternatives to a partnership in your online business? I'm sure what the reason is, but there seems to be something magical about creating a partnership in business. I suppose that's because it's common among the various professions in the offline world. It probably adds a certain amount of psychological legitimacy to the business at hand, too. But, is it really that good of an idea? What alternatives are there?

(I should mention straightaway that a good tax accountant will be able to advise you on which structure you should use.)

But, as a non-tax professional, I can tell you that, in general, forming a partnership is not a good idea, even if you plan to divide the profits with your partner.

Here's why.

1. Partners share the decision-making authority equally in the business.

When you each have a 50% say in what the business will do, everything can grind to a standstill. That's because it takes a simple majority to carry the day. If one wants one thing and the other wants something else, there's no deciding vote.

2. Partners share the debts as well as the profits.

When a partnership first begins, no one ever imagines that anything could go wrong. And the reasoning is that these peoplw wouldn't form a legal entity between them if they thought that anything would.

It's a bit like a marriage. Few people ever imagine that a separation, or worse, will ever occur. The vows "until death do us part" seem so easy to say. Later we're reminded that we're committed in both "sickness and in health."

And just as in a marriage, partners can run up debts independently of the other; but the liability for paying them is shared.

3. Partners must agree on how to make the business grow.

It's likely that each partner will bring different strengths and various weaknesses to the business relationship. And here's the thing - and we all tend to do this: one partner will interpret the way to develop the business according to his or her strengths. So, this becomes another opportunity for conflict.

A better solution to a partnership, then, is either an informal cooperation on one project or a company in which both are employees. Then one of them can retain the 51% share of the business just in case there's a time that they can't agree.

The time to plan for a disagreement is before one ever happens.

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Or, do you want to learn how to set up your own online business. If so then go to Zero to Hero Plan for more information.