Your option for getting into a business with another person if it’s going to be a joint effort, are your typical forms, are going to be a partnership, which can be a general partnership, which is very similar to the concept of a sole proprietorship, it's just that when you have a partner there's two of you, when you are sole proprietorship, you are the sole owner of the business. With the general partnership, you can split the ownership interest that you want with one another however the case may be, typically you're going to want to have a partnership agreement. Alternatively, you can form a limited liability company and essentially the idea and the way it's carried out is very much similar to a partnership, a general partnership, the difference being between an LLC and a general partnership is that the limited liability company is going to again going to have the protection of limited liability form. Whereas a General Partner, you are still going to be personally liable for the claims of third parties and certainly to your partner. If there is a dispute between partners, there's a variety of things that can happen, one there could be a forced dissolution proceeding, if the partners cannot agree to carry out their business any further and there can be what is called an impasse. One of the options that a partner can undertake is to force a judicial dissolution of the partnership. It's not a preferred method and sometimes it happens and it destroys partner’s relationships but if partners are destined for litigation sometimes it's the only thing you can do. And strategically sometimes it makes sense to at least threaten it or initiate a judicial dissolution. Partners, if it's not working out, business is not going good, then another option is that they can just wind up there their partnership, ensuring that all creditors, anyone with claims against the business or obligations that the partners owe to third parties, are taken care of but in this situation if you do have a general partnership, it's important again to remember that you would not have the benefit of limited liability protection. So all of your assets, your personal assets, are going to be subject to the claims of third parties. For more information about business law in San Diego, go to PurdyBailey.com.
