Thoughts on Partnership

Incorporation

Incorporating a business is crucial for protecting personal assets, as explained by David Baker. He highlights that while the type of corporation—such as LLC, S Corp, or C Corp—may vary, the primary goal is to shield personal property from business liabilities 1. In the U.S., LLCs are popular due to their tax advantages, and Baker notes that even giants like Amazon started as LLCs 1. He also touches on the concept of B Corps, which are for-profit entities with a social mission, requiring rigorous certification 1.

You absolutely should be incorporated.

--- David Baker

Blair Enns adds that Canada lacks the S Corp and C Corp distinctions, emphasizing the importance of understanding local regulations when incorporating 1.

   

Partnerships

Business partnerships can be complex, especially when involving spouses, as David Baker explains. While these partnerships often work well, they can limit career advancement for others in the firm and complicate internal communications 2. Baker shares an unusual case of a divorced couple successfully running a business together, highlighting the unique dynamics of partnerships 2.

We used to be married, but we discovered that we hated being married to each other, but we loved running a firm together.

--- David Baker

Silent partners, often family members, are rare but can be beneficial if expectations are clear. However, Blair Enns notes that 26% of surveyed partners regret their choice, suggesting the need for careful consideration and possibly consulting experts like Baker to resolve conflicts 3.