I’m a little surprised to see so much resistance to partnerships; I’ve seen folks have as much success with them as I have seen failure. I’m not saying one shouldn’t be cautious, of course, and I have no idea how the overall statistics on partnerships look.

@Ed – You’re stealing my thunder Today’s new post covers the LLC and the corporation, although I don’t (yet) go into the SP vs. LLC debate. That’s the topic of a future post. Feel free to include more of your thoughts on it here or there, though!

@Jeanne – @Phil is right; I’m not trying to offer advice here so much as point out some of the options available. I think (hope) most people are going to do more than read this article and it’s companion article from today before making their decision about what kind of business they ought to run. I’m just covering the basics.

Thanks for your thoughts, all, and keep ‘em coming!

Before talking to an accountant or lawyer, I would recommend talking to a represenative from SCORE (Service Core of Retired Executives). SCORE chapters tend to be available at local universities and many colleges. Discussions are free, and they have no vested interested. An accountant or lawyer may have you set up the structure that is best for him/her rather than for your business. I’ve known of businesses who were set up on an accrual basis rather than a cash basis just for the convenience of the accountant.

In my opinion, partnerships are a bad idea for freelancers. If you ever form a partnership, ALWAYS get your agreement in writing and have an attorney review it. I don’t care if your partner is your best friend or your sibling; get it in writing.

You need to do careful research into the major business structures: sole proprietorship, LLC companies, and corporations. There are legal, tax and administrative ramifications of each.

Find a local business attorney. Many give a free consultation. Call until you find one who does. Then meet with him or her and get their advice on which business structure is right for you. You may also wish to consult an accountant. It’s worth it.

Because I write as well as provide consulting and coaching (and we own an
e commerce site too), I incorporated my business. I draw a salary from my company. We must maintain certain records, complete tax forms monthly and file a lot of papers with the state. But it was the right business structure for our group of businesses operating under the same umbrella and gives us certain benefits we did not get as a sole proprietorship.

Talk to an attorney and an accountant. While it’s great to read articles on FWJ, there’s so much more to understand.

I look forward to your take on whether an LLC (with emphasis on limited liability) is more suitable than straight sole proprietorships. I think we all want the flexibility of sole proprietorships with the limited liability of an LLC but not the book-keeping nightmares of a Corporation. Somewhere in my research (this is usually a week before tax time) I found a middle-ground – and lost the link