Many think of quitting their boring and monotonous 9-5 desk job and do something of their own. Becoming an entrepreneur is a dream of numerous people all around the world. Unfortunately, not everyone gets the opportunity to follow their dream because of the various restrictions and limitations that one has to face down the line.
Let’s face it! Starting a business is not as easy as it might look from the surface. So, if you have the idea but lack the other resources that are required to give a physical form to your dream, then why not go with limited partnership.
For the funding part, you might go any Installment loans that you can get with no credit check from any direct lenders. It will be enough to manage the set-up cost of a home-based business. But, if your plan is to go with full scale, then the partnership could be a great option.
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What exactly is a limited partnership business?
There are various ways to start a business and one among them is a partnership. It merely means that you will have to run the business with multiple partners. Now, finding a partner who is as passionate as you and share the same vision could be difficult.
In a limited partnership, you get to work with partners who will only indulge in the investment part of the business. So, the other person will have to play the role of a general partner; mostly, you in this case. The general partner will have to take care of the administrative tasks and manage the liabilities and debts of the business.
Professional reasons to go with a limited partnership business
If you are just a start-up and planning to expand your business furthermore but lack funds, then limited partnership could be a great use. Now, let us discuss the main benefits of forming a limited partnership business has to offer.
Large capital as investment
First and foremost benefit of the limited partnership business is the potential of getting significant wealth for the set-up. The limited partner will be investing a large amount of money, which will be more than enough to look after the financial requirement during the early stage. Any business that is appropriately funded has a better chance of getting successful, and you get the opportunity to make more profits.
Major tax benefits
Another great benefit of forming a limited partnership business is the significant tax benefits. As you will be working with a partner(s), so all the profit and losses will be distributed among all others as per the investment made. Also, the partners will be taxed simultaneously on their personal tax returns. Apart from that, there will be other estate-related tax benefits that could be used for other business tasks.
General partners have the upper hand
Now, if you are going with a limited partnership business, then you will get the absolute power. Being the general partner, you will need to take all the administrative decisions and take full responsibilities on the cash flow management. Thus, there will be no need to consult the limited partner with any of the business decisions.
The amount of paperwork required in starting a limited partnership business than forming a corporation is significantly lower. It will reduce the burden from your shoulder significantly, and you can dedicate your time on other useful things. However, it is imperative that while forming a limited partnership with any individual, don’t forget to make a legal agreement before starting the venture.
Plethora of investment opportunities
One good thing about the limited partnership is that your start-up will get a plethora of opportunities to get a lot of investment. The profit and losses will be distributed among the partners without actually getting deeply involved in the business. And, in case, if any specific partner leaves the company, then the partnership will still not be dissolved. You can find another partner if something like this happens.
Possible challenges with limited partnership business
Before, jumping to the conclusion that limited partnership is altogether a great idea to run the business, you must fully aware of its possible drawbacks. Here are the challenges that you could face with this venture idea:
More risk to the general partner
It will be the general partner who will be handling the administrative tasks of business. Thus, the responsibilities of assets and debts will be solely yours. If the company goes into bankruptcy, then it will be the general partner who will have to bear the financial consequences.
Even though the legal partners will not get indulged in the daily business operations, but you will have to conduct an annual meeting from time to time. The reason is quite valid because they will be investing as well.
It was everything that you need to know about the limited partnership and how it can help to start a business even if you lack funds. An essential thing in this form of start-up will be the partner who can help you financially and provide the right suggestions.