Choosing a legal structure is an important part of starting a business. Every business has to have one. Will yours be a sole proprietorship? A corporation? A partnership?
It may be tempting to enter into a partnership on a handshake, but don’t do it. A partnership agreement will help protect you and your business from some of the pitfalls of partnering.
Two heads are not always better than one. In his book, The Complete Guide to Home Business, Robert Spiegel aptly describes partnerships as “a two-headed beast that will try to walk in two different directions someday.” If you’re thinking about entering into a partnership, beware—it can get messy.
A business can operate as either a for-profit or a nonprofit venture. The structure you choose should match the purpose of your business. There are a number of factors to consider when deciding whether to structure your business as a for-profit or a nonprofit.