14 Tips on Joint Business Plan

Filed in Business Idea by on December 5, 2021 0 Comments

Joint Business Plan: An effective Joint Business Plan can be run with a level of efficiency.

That few other types of business organization can match.

However, there are risks associated with a Joint Business structure that is unique to the form.

If you’re thinking about starting a Joint Business.

You need to be knowledgeable about the costs and benefits of that structure.

And how the start-up process works.

A Joint Business is a single business where two or more people share ownership.

And each owner contributes to all aspects of the business.

As well as shares in the profits and losses of the business.

Joint Business Plan: BusinessHAB.com

Joint Business Plan

Joint Business Plan

1. Choose your partners wisely.

You want to be able to articulate with specificity why this particular person.

Or people are necessary components of building a successful business.

The prospective partner should have financial resources, connections, or vital skills you lack.

This might be the most important step of all.

Because the answer will determine what type of partnership you create.

And the terms of your partnership agreement

See also:8 Steps to Starting Bottled Water Business 

Joint Business Plan

  • For example, if the only reason you need a partner is to gain access to capital that you wouldn’t otherwise be able to gain access to.
  • You will want to strongly consider a limited partnership (LP).
  • The other forms of partnership are legally going to give your partner a say in management, which you probably won’t want.
  • If cost-sharing is your primary motivation for entering into a partnership, consider a limited liability partnership (LLP) if that form is legally available to you.

    Joint Business Plan

  • For example, an attorney might consider it necessary to have a secretary.
  • One secretary might be able to easily do the clerical work for two attorneys.
  • So it is more cost-effective for them to form a partnership to share costs.
  • Consider the intangibles. You are going to be financially intertwined with your partners for the life of the partnership. Things like work ethic, character, and personal compatibility are going to influence the ability of your partnership to be successful, so think carefully about these types of issues.

Read on: 12 Methods to Starting Home Care Business 

2. Make sure all the partners know what the other partners are expecting.

You will want to discuss the roles and responsibilities of each partner prior.

To write up the partnership agreement, and certainly prior to going into business.

You need to know what your partners expect from you.

And they need to know what you expect from them.

Make sure that the reasons they want to form the partnership are compatible with the reasons you want to form the partnership.

  • While you don’t need to iron out every detail, make sure that you and your partners also go over your initial business strategy before you take the plunge.
  • Starting a new enterprise is always difficult.
  • There’s no need to add a major conflict about management and strategy to your difficulties.

3. Choose a name.

When you choose a name, you’ll need to make sure that there isn’t another business of the same type that has that name. Otherwise, you could run afoul of trademark law down the road.

  • Do an internet search. This should be your first step, and it’s probably going to be the easiest.
  • If something that you wanted pops right up, then you’ll know you need to think of another name.
  • Check with your state’s Secretary of State’s Office.
  • In most states, corporations, LLCs, LPs, and LLPs file with the Secretary of State.
  • These days, there’s usually an easily searchable database that can tell you if your desired name is already taken.
  • Check a fictitious name database. Sometimes a business will use a fictitious name instead of the formal company name (usually if they plan on starting several ventures under one company). Fictitious name databases are usually also kept by the Secretary of State but can be kept by other state and county entities.

See also:6 Ways to Invest Property 

4. Write up a partnership agreement.

If you partner up as an LP or LLP, you’ll be legally required to do this.

Even if you’re partnering up as a general partnership (GP).

It’s best to have the terms and conditions of your venture in writing.

There is a fantastic article covering the details of writing up an agreement here:

Write a Partnership Agreement, but the basics of what to cover are straightforward.

  • Make sure that your partnership agreement enumerates the initial financial contributions each partner.
  • How profits will be distributed, and who is responsible for the various managerial roles.

    Joint Business Plan

  • A good partnership agreement will cover what happens to the partnership going forward.
  • You will need to explain how members can enter and exit the partnership, grounds for expulsion, and under what circumstances the partnership is dissolved.
  • It is especially important to create a detailed partnership agreement.
  • If you are partnering with a close friend or spouse.

    Joint Business Plan

  • Marriages and friendships end, and if your partnership is going to end along with it.
  • You need to have ironed out the terms of dissolution and division of assets in advance.
  • Just as responsible spouses draw up wills and buy insurance policies to guard against the worst, responsible partners will draw up an agreement that covers the terms of their business partnership.
  • It will save you and your partner an expensive legal battle if the worst happens.

Read also: The 9 Management Tips of Business Inventory

5. Register your partnership.

If you are using the LP or LLP structures.

You will be required to register your partnership with your state government.

Although GPs are usually not required to register with state government (beyond registering the name).

A few types of businesses (think alcohol, tobacco, and firearms) are required to register with the federal government.

6. Get a Tax ID number.

Although the income from a partnership is taxed as personal income.

You will still need to file a statement with the IRS called an Annual Return of Income.

For that, you will need a Tax ID number or Employer ID number.

See also: 7 Considerable Process for Jam Jelly Making Business

Joint Business Plan

7. Obtain the necessary licenses.

Most businesses are going to need state and local business licenses.

The licenses needed are highly specific to each state, locality, and type of business.

To find out what permits and licenses you to need locally, call your city and county governments.

8. Get the advantage

It’s generally pretty easy to form a business partnership, and it doesn’t tend to be super expensive, either.

Having two or more people equally invested in the business’ success allows you to pool resources.

It also means you have access to more than one person’s skill set and expertise.

Read also: 6 Printing Process to Make Money with Mug from Home

9. Get the Cons of the business

Just like a sole proprietor, partners have full, shared liability if the business goes south.

That also means that partners aren’t just liable for their own actions, but also the actions of their partner(s).

There is a variant on partnerships called a limited liability partnership, or LLP, that protects against that.

Which is how most law firms are organized, for example.

Finally, when more than one person is involved in decisions, there’s room for disagreement.

Which means it’s important to have an explicit agreement.

Over how the obligations and earnings will be split, especially if/when things go wrong.

10. Know How taxes work:

To form a partnership, you have to register your business with your state.

A process is generally done through your Secretary of State’s office.

See also: 40 Methods To Make Your Business Exceptional

11. Take care of business.

Once you have decided on partners, write a partnership agreement.

And completed the necessary registration and licensing.

You’re almost ready to get to work.

Every business will have a few remaining requirements that are specific to that business.

But almost everyone is going to need business cards and a website.

Get your cards printed and your website up and running.

And go out and conquer the world of business.

12. Articulate why this business form is right for you.

People start businesses every day, under a variety of organizational structures.

Your partnership is far more likely to be successful if you understand why it is that a partnership is preferable for your situation.

  • While a sole proprietorship is probably the cleanest and most efficient business structure in terms of turning conception into action, there are drawbacks.
  • The sole proprietor is personally liable for the business’s obligations.
  • That means that your own personal assets, like your house or car, can be confiscated to satisfy the debts of your business. For this reason, it is often very difficult for sole proprietors to raise capital.

    See also: 7 Tips about T Shirt Printing Business 

    Joint Business Plan

  • C corporations and S corporations provide the most protection from personal liability, but they also have the highest start-up costs.
  • They are more attractive to lenders but subject to more regulation than the other business structures.
  • In addition, C corporations are double-taxed–subject to corporate income taxes and capital gains taxes on the dividends paid to shareholders.
  • Limited liability companies (LLC) offer many of the same liability protections as corporations.
  • However, in some jurisdictions, businesses like insurers or banks are prohibited from organizing as LLCs. In addition, LLCs often dissolve when a member leaves the company.
  • And unlike partnerships and corporations, the role of each member is often unclear.

Joint Business Plan

13. Gain access to capital with a limited partnership.

A limited partnership (LP), has at least one managing partner, or general partner.

Who will be personally liable in the same way that both partners in a GP are?

The crucial difference is that an LP will also have at least one limited partner.

Or non-managing partner, who provides funding in exchange for a return on investment.

As you might guess, the limited partner’s liability is limited to financial investment in the partnership.

And not their personal assets.

If your biggest goal in partnering with someone is access to capital, then this might be right for you.

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14. Think about whether a limited liability partnership is a good fit.

In most jurisdictions, a limited liability partnership (LLP).

Limits the liability of both partners to their investment in the partnership itself.

Protecting their personal assets.

Unlike LPs, both partners in an LLP have a say in the management of the business.

Income from the partnership in an LLP is only taxed once, as personal income.

  • In a lot of jurisdictions, LLPs are limited to certain classes of business.
  • Usually, this means professional firms, like lawyers, doctors, or architects.
  • LLPs are sometimes subject to reporting requirements and are generally more costly to start than the other types of partnerships.
  • LLPs work especially well in businesses that are heavily reliant on the specific skillset and client base of the partners.
  • The structure allows them to share costs, and, because ownership and management cannot be separated, maximize the amount of income the partners take home.

Conclusion

Joint Business Plan: One of the partners is designated the operator.

All parties are to share in the cost of operations.

Each partner can lift and separately dispose of its interest share of production subject to the payment.

The operator is the one to prepare proposals for a program of work and budget of expenditure joint on an annual basis, which shall be shared on shareholding basis.

Each party can opt for and carry on sole risk operations.

Technical matters are discussed and policy decisions are taken at operating committees where partners are represented on the basis of equity holding. ​

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