In this video, Minnesota business attorney Aaron Hall speaks about the pros and cons of general partnerships.
General Partnership Video Transcription
How do I start a general partnership in Minnesota? I’ve been asked this question a number of times and I’ll answer it when we come back.
I’m Aaron Hall, Business Attorney from Minneapolis.
A general partnership is pretty simple. All you do is start working together with another person. You share your funds, you share your profits, and you work together. Is this a good idea? No. The reason is you’re both jointly, personally, liable for the acts of the other. That means if one person does something wrong in the business and causes harm to another, you’re personally liable.
That can affect your home, anything you own, all the money in your bank account. Unless you file for bankruptcy, your putting a lot at risk. A better option is a limited partnership, or even better yet, a corporation or and LLC. You’ll also find some tax benefits with an LLC which is taxed as an S corp, or an S corporation.
If you have questions about these types of issues, typically you can save thousands of dollars a year by working with an attorney, and their work may cost a few hundred dollars to get set-up properly. Feel free to give us a call if you have questions about general partnership formation or any of the other business types.