You’re out for lunch with a friend one day and an idea pops into your head.
You start to hash out the details.
Next thing you know, you’ve decided to go into business with your bestie.
Building a business with a friend can be a great idea, especially if you follow in the mantra of ‘many hands make light work.’ I’m more of a ‘too many cooks spoil the broth’ kind if girl, so I guess I’m built for sole proprietorship.
In a partnership, you can:
- Split the duties and get a lot more work done
- Collaborate and build ideas together
- Tap into your friend’s skill set, abilities you may not have
- Motivate each other for a common goal
- Share the financial risk of building a business
But is it a good idea?
Entrepreneurship is an adventure, and we all love to have our best friend along for a great adventure.
It can test your friendship; it can destroy your friendship.
You both have to believe in the project and be prepared to do whatever it takes to make it a success.
You should make sure you have:
- Complementary skills: too much redundancy won’t get you very far
- A broad network base: if you all bring the same contacts to the table, you won’t sell much
- Some business acumen between the two of you
- The type of friendship that allows for respectful disagreement
- Admiration for each other’s work ethic
Hammer out the details of your partnership
Once you’re sure you can make it work, don’t just shake on it, or hug it out. Make sure you write a partnership agreement.
The partnership agreement is a legal document that defines each partner’s rights and responsibilities, along with the provisions for running the company — day-to-day and during a special occasion, such as death of a partner or dissolution of the company.
This stack of papers is vital to your new business, since it protects you, your partner and each of your investments.
You shouldn’t need to hire a lawyer. Entrepreneur.com has a template (state-based, but that’s easy to change for Canadians) you can use to create your own partnership agreement.
You may not need to hire legal advice to build your partnership, but we are available to help with your startup and planning your small business.
Here to help
A1 Accounting, a Calgary accounting and bookkeeping firm, is here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.