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Archives - March 2014

Don’t Go It Alone: The Benefits of Partners in Business

March 17, 2014
By Chris Karlo

There’s really no right or wrong answer to the question of whether you should have a partner in your business.  I must admit, though, that I’m biased, as I chose 10 years ago to become a partner in a digital application development and professional web services firm.

Having a business partner is a lot like a marriage – in fact, I probably see my partner more during the week than I see my wife!  Similar to when people say that marriage is hard work, so is having a business partner – but in both cases it’s worth it. Here are some quick advantages I see to having a business partner:

  • Access to capital – debt and equity: Credit worthiness and, for some startups, credit cards, get you more mileage with two people and preferred treatment by VCs and investors.
  • Coverage in areas you’re not particularly strong in: We can’t all be good at everything, but partners usually have different strengths that complement each other.
  • Avoid inertia and paralysis:  Having a partner helps you move forward in the deliberation and decision-making processes.
  • Nobody is as invested in the outcome as an owner: It’s the old principle of having skin in the game. No one cares more than the folks who are invested financially in the success of the business.
  • Brainstorming: There’s nothing like the free flow of ideas with someone who knows the business as well as you do. 
  • Sense of responsibility: When someone else is relying on you or expecting something from you, you’re more likely to perform without hesitation.
  • Pick you up when you’ve hit the floor: You could argue that friends and family could do this as well, but no one is going to understand how you’re feeling like your partner.

So it’s easy enough to say that having a partner is better, but how do you find the right person?  That part isn’t so easy. Here’s what I suggest you look for in a partner:

  • Someone who complements your skills
  • Someone who thinks enough like you to make planning and execution go smoothly, but is not a clone
  • Someone with a shared vision
  • Someone whom you can trust completely
  • A really hard worker
  • Someone who is smart - even better, someone who is smarter than you
  • Someone who is passionate
  • Someone you enjoy being with… a lot!

As I said at the beginning, there’s no definitive answer as to whether or not everyone should have a business partner. You can find wildly successful examples of people in all industries who got there with – and without – partners. My advice is that you explore your options and pick what’s right for you and your business. You just may agree that “two heads are better than one.”

Chris Karlo is partner at Mercury New Media (www.mercurynewmedia.com), a leading digital application development and web professional services firm.  You can reach him at ckarlo@mercurynewmedia.com.

Getting Your Business Started Off Right

March 03, 2014
By John Connery

As soon as you are certain you want to start a business, it’s time to decide on the type of business it will be.  At the risk of appearing to be self-serving, I want to add that this is when you should consult an attorney and accountant.  The decisions you make then will have an impact throughout the course of your business and you will benefit from some wise advice.

Each type of business structure has its own implications for liability, taxation, ease of operation and exit, capital structure and other factors.  Let’s take a quick look at the most important characteristics to see what might be best for your business:

  • Sole proprietorship:  This is an unincorporated business with one person who owns and controls it.  The owner is personally liable for the business’s obligations; tax obligations flow directly to the owner’s personal tax return.
  • General partnership:  Similar in a number of ways to the sole proprietorship, this unincorporated business features two or more persons who co-own it.  Partners control it equally and share tax and other liabilities equally, with tax obligations passing directly through to owners.  Each partner has personal liability for the partnership’s liabilities.
  • Limited partnership:  This is similar to a general partnership except that limited partners enjoy limited liability but have little or no control.  Again, tax obligations pass directly to owners.  The general partner has personal liability for the partnership’s liabilities.
  • Limited liability company:  This structure offers the “best of both worlds” -- pass-through tax obligations (avoiding double taxation) along with limited liability for all owners.
  • C Corporation:  This incorporated business is a separate legal entity with double taxation (both corporate and personal) and limited liability for its shareholders; along with more formal governance requirements.
  • S Corporation:  This structure combines a number of C Corporation features with pass-through taxation.
  • Professional association:  This is a corporation formed by professionals such as lawyers and doctors, providing some of the tax advantages and liability protections of a business corporation.   

Which is the right structure for you?  As you’ve seen, it depends on a number of factors, including how many owners there are and how important the liability and tax implications are to them.  Once you’ve made these decisions, the process itself is relatively simple and painless.

John Connery of Hill Ward Henderson is a shareholder and co-chair of the firm’s Corporate & Tax Group.  He also leads the firm’s General Taxation area.  John serves on the board of directors and is immediate past president of the Association for Corporate Growth (ACG) Tampa Bay Chapter.  You can reach him at john.connery@hwhlaw.com

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