One main reason to form a partnership is for its favorable tax treatment. Partnerships are generally viewed as an “association of co-owners,” and the profits “flow-through” to the partners, and are taxed at the individual level, rather than taxed at the “entity level” of the business.

One of the first steps to forming a partnership is drafting the partnership agreement. This agreement addresses questions including the following:

• Where will the business obtain its capital investments?
• How will profits and losses be divided between or among the partners?
• May a partner borrow from the business?
• Will salaries be paid?
• What will the management responsibilities of the partners be?
• If a partner dies, will the business carry on? How?
• What is the “exit strategy” for a partner wishing to leave the business?
• How will disputes be handled?

Lewis-Traut & Ruswick, APC can answer these questions for you.