Establishing a business partnership is one of the cheapest and easiest ways of building a business structure. But before entering into a partnership, you must first remember some important points:

• Personal liability – Except in limited partnerships, all owners of business partnerships are liable for all business debts and obligations, including judgments.

• Joint authority – Any individual partner can bind the whole business to a contract, meaning any one of the partners can commit the business to a deal.

• Joint liability - Each individual partly may be held accountable for business debt.

• Partnership taxes – Payment of taxes in a business partnership is done through the "pass-through entity" principle in which the owners are required to submit an IRS form to declare their separate income.

To function effectively, a business partnership must be governed by a set of rules called the partnership agreement. With the help of a business lawyer, partners of a business partnership must draft an agreement. The partnership agreement would also be useful in settling disputes that may arise in the course of conducting a business.

Here are the key points that must be covered by the partnership agreement:

• Name of partnership

• Contributions to the partnership – It is important to note the contributions made by each partner and what percentage of ownership each partner will have.

• Allocations of profits, gains and loss

• Partner’s authority

• Partnership decision making

Starting A Partnership in Business

Before starting a partnership, this is a checklist of steps to take before you open for business. Startup requirements in business may vary, depending on the specific type of business you are planning to put up, and where your business is located.

1. Decide on a business.

2. Choose a business name and have it registered.

3. Create and sign a business agreement with the help of a lawyer

4. Register your partnership by filing a certificate or registration of partnership with the Secretary of State. This step is required for limited liability partnership (LLPs) and limited partnership

5. Obtain forms of business licenses and permits from the federal offices, state government and the local government

Forming a partnership can have a long-term benefit to your new business in the long run, but the process -- most notably drafting a comprehensive partnership agreement -- can be complicated. To ensure that your new partnership covers all legal bases and has the best chance for success before opening for business, you may wish to consult an experienced business attorney.