3.2 Partnerships

CHAPTER 3

The main disadvantage is the business owner (or owners) is liable for the business’ debts and obligations. This means that you, as a VRP owner, would be vulnerable to having your own personal assets seized should a renter choose to sue you and win in court.

Why Choose a Sole Proprietorship? Sole proprietorships are usually formed by accidental entrepreneurs and new business owners beginning a business without really intending to start a company.14 As soon as you have revenue, you have a business. With a sole proprietorship, there is no state fi ling to begin the business—and there is no separation between the assets of the business and those of the owner. Again, if you are operating as a sole proprietor, your personal assets, including your home, can be used to satisfy business debts and liabilities.

3.2 Partnerships

Let’s say two or more people want to start a VRP business together. They can form a partnership. There are several types of partnerships. This includes general partnerships, limited partnerships, and limited liability partnerships. Joint ventures have some aspects of partnerships. Control exerted over the business, the amount of money contributed, and legal liability varies depending on which type of partnership is formed. Most states require partners to register their business with the state to form a partnership. Partners should formalize their relationship in a partnership agreement, which is a contract that addresses the main aspects of the business, such as:

• How it will be run • How profi ts are split • What to do in the case of dissolution

14. https://www.bizfi lings.com/toolkit/research-topics/launching-your-business/planning/ understanding-the-requirements-of-business-ownership Accessed May 16, 2019.