Going into business for yourself is challenging. But, it’s even harder when you go into business with other people.
It’s true that you have help when you partner with others. However, teamwork can be just as hard. You might have to work with different personality types. Those different beliefs could conflict with your vision.
In addition to different opinions, your partners could expose your business to liabilities. Like you partners, you are on the hook too when these risks arise.
What’s a Business Partnership?
You need to understand liability exposure and how it works in a partnership. However, you should understand a business partnership itself. A business partnership is a business owned and operated by two or more people.
With a partnership, you agree to share both the profits and losses your business faces. These losses can stem from a variety of reasons. However, if a partner acted on behalf of the business, you are likely responsible also.
You Have Unlimited Personal Responsibility in Partnerships
You’ve probably wondered how you would divide profits based on your partner’s contribution. You generally want profits divided evenly, and they often should be.
However, the same premise holds true when it comes to losses. If your partner made a decision that resulted in financial loss, you would share in those losses.
To avoid this problem, many people form a limited liability partnership. In a limited liability partnership, partners have limited liability. They are not wholly responsible for bad decisions and losses other partners make.
Although it’s a great idea, limited liability doesn't protect you financially from losses.
Protect Your Business with Business Insurance
If limiting your financial responsibility is concerns you, then consider business insurance. In particular, you must carry general liability insurance.
Commercial general liability insurance will help you with personal injury, slander, negligence and advertising injury. It is the safety net you need to ensure your business can withstand a lawsuit stemming from a partner’s actions.
If you don’t have Kentucky commercial insurance it’s time to get coverage. First Insurance Group can offer you a business owner’s package with many partnership options. If you have additional questions call an agent today at (800) 511-2892.