Business Partnerships Can Be Lucrative and Exciting
Forming a business partnership can undoubtedly be an Exhilarating experience! You’ve found a person that shares your ideas, interests, and goals. You work well together, have a shared vision, and the next logical step seems like it should be a business venture. But is it? Before you form a business partnership bound by finances and laws, you may want to make sure that it’s the right move and that you’re doing it for the right reasons. Being fearful of entering into business alone or feeling that you lack the financial skills or connections are not great reasons to enter into a partnership with someone.
5 Things to Consider Before Entering into a Business Partnership
Whether your potential partner is a new acquaintance or a long-time friend, it will pay dividends to perform extensive due diligence before investing significant amounts of time and money. Below, we’ve put together a list of five crucial things to keep in mind when entering into a partnership.
1. Ask the Right Questions
At the beginning of any business relationship, it’s essential to take stock of your partnership and hold a clear understanding of the potential outcomes. To properly do this, you may want to ask yourself:
• Do you trust this person?
For any business relationship to be prosperous, you’ll want to trust the other parties involved.
• Have you worked with them before?
If you have a previous relationship with a potential partner, you’ll at least have a better understanding of who they are and how they conduct business.
• What are my boundaries?
Having crystal clear boundaries about what is and isn’t acceptable practices is vital to avoid stress and potential confrontations that can harm business.
• Are your skills complementary?
Do you work well as a team? If your background and skills don’t complement each other well, they probably still won’t even when bound by legal agreements.
2. A Partnership Agreement
Any business partnership needs to be in writing. That’s the whole point, after all. Partners need to be willing to put their agreement on paper to avoid both parties from potential liability issues. Ensuring that everything is in writing will allow you and your partner to resolve any problems that may arise.
3. Determine Each Partner’s Roles and Responsibilities
Managing duties and expectations is a critical aspect of running a successful business. Having a clear-cut set of responsibilities will help all partners steer clear of resentments that may arise if roles and duties are not appropriately handled.
4. Focus the Partnership on Profit
All involved parties will need to have the same level of commitment for your business venture to be successful. Therefore, it’s important that partners are accountable for their decisions and consistently measures overall performance.
5. Develop an Exit Strategy and Dissolution Plan for Partners
At some point, a business relationship must inevitably change or end. Partners may have many reasons to leave the deal, and it’s crucial to develop a clear plan for how all parties will divide resources, assign compensation, and handle remaining clients in the event of partnership dissolution.
Seven Corporate Structures in Dubai
When forming a business partnership, you’ll need to define your business’s corporate structure. There are a wide variety of formats to choose from, from sole proprietorships to joint ventures. Dubai has versatile laws to make corporate setup more accessible, but you’ll need to know exactly what you expect out of your company to choose the proper structure. For this, many companies hire 3rd party consultants like MSZ Consultancy to help them with company formation in Dubai. But if you opt to form your business on your own, we’ve put together a list of different corporate structures and how they work.
1. Public Joint Stock Company
A public joint stock company is a corporate structure where capital is divided into equal shares dispersed amongst shareholders. Corporate rights for these shares are certified by stocks that can be bought, sold, or traded at any time without the consent of other shareholders.
2. Private Shareholding Company
Private shareholding companies are a form of corporate structure owned by non-governmental shareholders. Company stocks are held by a limited number of shareholders who are not allowed to trade them publicly.
3. Limited Liability Company
A limited liability company (LLC) is a business structure where shareholders are only liable for a limited amount of assets or losses.
4. General Partnership
A general partnership is a legal arrangement between two or more parties where each is jointly and separately liable for all assets, profits, and losses. Typically, only UAE nationals can form a general partnership in the UAE.
5. Limited Partnership
Limited partnerships are a legal structure with two or more partners, where one is a general partner while the other operates in a more limited capacity.
6. Partnership Limited by Shares
This structure is for companies with one or more general partners that are jointly liable for any assets, profits, or losses during business.
7. Joint Ventures
A joint venture is a popular business structure that allows companies or investors to operate under a contractual agreement. Typically, joint ventures have the same types of protections as LLCs.
Entering into a Partnership in Dubai? MSZ Has the Answers!
Starting a new business venture with a partner is one of the most exciting parts of conducting business. It’s can often be a thrilling moment where everything you’ve worked for comes to fruition. However, with any legal agreement, it pays to have a thorough understanding of the process, the pitfalls, and exactly why you’re entering into the partnership. Having a clear-cut idea of the duties, responsibilities, and control of your partnership will help you avoid potential problems over the business’s life.
And for business setup in Dubai, there is no better ally than MSZ Consultancy. From company formations to securing local sponsorships in Dubai, our team of consultants has the inside knowledge to help you navigate the UAE business world. It doesn’t matter whether you’re a single investor or part of a larger corporate structure; MSZ Consultancy is your one-stop-shop for all things business-related!
We have proudly served over 32000 happy customers, including clients in construction, healthcare, oil and gas, and more. So if you’re thinking about securing your trade license in Dubai or applying for your residential visa, we have the tools and skills to make the process easier. Give us a call today at +971 52 544 1248 and let us help you maximize your business potential!