Setting up a partnership company is not an easy task. There are a lot of aspects that need to be taken into consideration in order to create a successful partnership company. Some people would like start a partnership company where they can share responsibility in expenses, sharing the revenues based on the amount of work they have done. Before you start a partnership company, bear in mind that there are several factors that you will need to consider first:

1. The profits shared are not essentially a 50-50 ratio. Flexibility is important as you will need to consider the quality or amount of work you and your partner provide. One may get 70% of the profit and the other gets 30%. Take note that this percentage allocation needs to be mentioned in the agreement.
2. You need to have the details on paper (black and white). It is a huge mistake if you do not have a written partnership agreement. If your partner is not satisfied on the allocated profits, problems may arise as tracking could not be done.
3. There is no liability protection. This is a disadvantage to the partnership company because each partner has the liability for others’ actions. There is no protection that can be applied if you are the owner of the company.
4. Partners do not need any payroll. In a way, partnership proves to be simpler than corporation as corporation has to pay wages to the shareholders. The shareholders too are subject to the benefits of an employee. In partnership, payroll is not required at all therefore paperwork could be cut down. However, this does not mean that partners could escape from taxes and income tax.
5. Tax benefits exist. Partners are treated similarly to the sole proprietors. General partners too can minus 60% of their medical insurance.

By evaluating the factors mentioned above, starting a partnership company is just a step away. Review all the necessary points before proceeding to the next step.