Business Partnerships: Making the Most Out of Every Legal Move in Los Angeles
Days of the Mom-and-Pop Shop Eclipsed by Corporations in Los Angeles, Yet Opportunity for Small Partnerships Abounds2 min read
In Los Angeles, the days of the mom-and-pop shop may now be eclipsed by large corporate business entities, but that doesn't mean there isn't potential for smaller partnerships to find success in the city. Business partnerships are a common way for more than one investor to share in the risks and rewards of business ownership.
It's important for prospective partners to understand the different types of business partnerships available, and the laws that govern them, before entering into one. Local businesses, especially, need to be especially vigilant to ensure that their business partnership conforms to local Los Angeles laws.
Types of Business Partnerships
Before choosing a business partnership, prospective partners should understand the different types available and determine which best meets their business objectives.
The most popular types of business partnerships are general partnerships, limited partnerships, and limited liability partnerships.
General Partnership
The primary feature of a general partnership is that the business partners maintain a shared responsibility for business decisions, liabilities, and obligations. While this may provide some advantages—allowing partners to draw on the strengths and resources of one another—it also carries significant disadvantages, notably that each partner is liable for the mistakes of every other partner.
Limited Partnership
A LP is similar to a general partnership, but it has one or more general partners and one or more limited partners. The limited partners are only liable up to the amount of money that they have invested in the business, while the general partners are still liable for the decisions of the other partners.
Limited Liability Partnership (LLP)
Similar to the Limited Partnership, the LLP is structured to limit the personal liability of the partners and allows the partners to protect their personal assets. In an LLP, the partners are only liable to the extent of their investment in the business and have limited liability with regards to business debts.
Los Angeles Regulatory guidelines
The interest of partners in a business partnership and the rules governing it are typically set forth in either a formal partnership agreement or, in the case of a general partnership, an implied partnership.
In Los Angeles, any new business should be sure to register the business with the state of California and local government. Additionally small businesses may want to consider incorporating or forming an LLC, which reduces the personal liability associated with a partnership.
It is always best practice to consult a business lawyer who is experienced in business partnerships laws in Los Angeles before forming a business partnership in the city. An experienced business attorney can ensure that the business is following all of the regulations and laws to properly set up and form the business partnership. Additionally, they can provide counsel to ensure all the partners involved are fully protected and that the partnership agreement is detailed, specific, and properly tailored to the business venture and its needs.
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