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Are you sure your business has the right legal and corporate structure of business?
Business Structure: Business Building Blocks
Your legal and corporate structure is a very critical element of your organization’s long term success. Your business legal structure affects ownership rights and your personal liability. These essential building blocks are oftentimes neglected or overlooked by small business owners and it could cause your business venture to fail.
It is important that you research state law to determine ownership and liability laws specific to your business operation location(s).
Building Block Tip: Be aware that some states do not honor the Limited Liability Partnership structure.
Let’s take a look at the partnership structure. The contract expert in me leads me to advise my clients to create a written partnership agreement that outlines the partnership in detail including and especially expectations, requirements and financial contributions each partner is responsible for completing, producing, contributing. The system used for accounting and revenue management should also be described. It is imperative that all principals involved understand and agree to the entire contract prior to executing the contract. Upon execution each partner should receive an original signed agreement. If and when the agreement is amended, the changes should be agreed upon by all or the majority of partners (whichever is stated in governing document) and shall be signed and dated by all partners. Remember that the agreement is not an enforceable agreement until all parties have signed.
Choosing individuals to partner with in business with can be tricky and sometimes harmful, both emotionally and financially. I liken my strategy to choosing business partners to my strategy of evaluating the child care facilities for my son.
Building Block Tip: Guard your business like you would your newborn child.
Find a partner that shares your values, vision, and entrepreneurial spirit. It is important that you and your partner(s) are able to communicate effectively with respect for one another and the desire to sacrifice for the better of the organization. Don’t apologize for being choosy when it comes to picking the person you are going to develop your business with.
Look for the following characteristics when evaluating potential partners:
· A partner should bring experience and skills to the business;
· A partner must display and believe in good personal and business ethics;
· A partner must be trustworthy;
· A partner should bring creditability and valuable resources;
· R-E-S-P-E-C-T is an absolute must in any partnership.
Be sure to check back for more blogs on important pieces of the Business Structure Building Block.