Introduction to a set of business terms which are often misunderstood.
Business partnership creation handshake – Kyle Corbett Corbett Kyle Corbett Kyle Corbett Corbett business guru. Entrepreneur man dude thing heavy weight at arts and crafts for partnering with a partnership and done over a handshake in digital marketing and with being a Digital nomad Kyle Corbett corbett is the comedian that makes his own money as he follows your dreams.
UPDATED VERSION – WITH EDITS HERE: 2/5/24
I wanted to give a basic introduction to a set of business terms which are often misunderstood.
These terms may seem to be very typical, and they are often misconstrued in their original meaning. What is important is understanding their definition within the written terms and construct of a business or financial relationship. When creating a partnership with another person or business it is extremely important for clarity to be brought to the table prior to pulling out the pens. The contract may be ready and you may be excited, but what are you about to sign?
These next few paragraphs might help to define the terms of your relationship and can be referred to as a rubric for understanding and defining the basics of who is who under the umbrella of your business entity.
A Partnership must contain certain necessary items in order to be considered a “Partnership”. If not, then the relationship is titled differently and is subject to a much different classification of business relationship and thus incurs far varied terms and positional restrictions (IE Annual Interest % of financial contribution with mandated monthly payment terms. Terms are always inclusive of annual percentage of interest and additional interest incurs when the payments are not made monthly. Additional interest incurred will compound on unpaid debt from the lifetime of the loan for all money not delivered on time. Collateral must be agreed upon in advance (must include verifiable document to justify the ownership, existence, and value. IE: governmental documents supporting the existence and value of agreed upon property or asset for collateral.)
NECESSARY ITEMS: Without these it is not definable as a partnership.
A partnership:
- Has two or more individuals invested either financially or in another agreed upon manner
- Has its own legal entity and stands alone from any other business (EX. has its own electricity bill.) – Has to be individually taxable and accountable for all of its own profits and expenses without interference from any other entity or revenue generating source.
- Partners share the profits and are responsible for (except in the case of certain “limited partnerships”) the company’s debt and profit losses.
- Open Books: Ledger of company expenses and profits (all losses and gains recorded w daily, weekly, and monthly numbers reported)
- Regular communication to partners (typically done through a monthly newsletter)
- An exit strategy = also known as a back door. Each person or entity needs to have a way they are aware of that allows them to leave the partnership. This may involve incurring a loss, selling their shares, or even such things as a dually applicable clause often referred to as a “Shot-Gun Clause”
Remember: You want to partner with people who bring much more than money to the table. You want people who bring things that will help the company GROW and prosper. You want the partners to make more money when the company makes more money because they are then incentivized to do anything they can on the side in order to assist the company in generating more revenue. This can be as simple as exposing the brand on popular and well seen social media channels, telling friends and family about it, recommending people to go there, advertising it on their own websites, and introducing you to other investors. Partners make your network grow.
The following is an excerpt from the Collins Dictionary which is a well known resource for the breakdown and comprehension of business related terms in their legal and socially used capacity. This is where lawyers go to define specific terms for court cases.
partnerin American English(ˈpɑrtnər)NOUN
- a person who takes part in some activity in common with another or others; associate; specif.,
- one of two or more persons engaged in the same business enterprise and sharing its profits and risks: each is an agent for the other or others and is liable, except when limited to his or her own investment, for the debts of the firm
https://www.collinsdictionary.com/us/dictionary/english/partner#google_vignette
The following was taken from Cornell Law School:
Partner
In general, a partner is a co-owner or investor in a business, called a partnership, who shares profits from that partnership with at least one other person and is involved with its operations. Partners are agents of the partnership and may enter into contracts on behalf of the partnership.
- An active partner is an invested individual who participates in the day-to-day activities of the partnership. An active partner is comparable to a member of a board of directors who also serves in a day-to-day position at a company. In comparison to a silent partner, the active partner usually shares greater risk and reward.
- A silent partner is a individual whose role in a partnership is limited to giving funds to the business, also known as a limited partnership. A silent partner is rarely involved in the day-to-day activities of a partnership and rarely attends management meetings. A silent partner may serve as an advisor even if they are not involved in day-to-day management.
https://www.law.cornell.edu/wex/partner
- Last updated in April of 2022
Limited Partnerships Defined:
- Limited Partnerships by Definition: A silent investor is typically referred to as “Limited Partnership”. This person is not typically involved in day to day operations.
- An investor whose investment position within the organization is limited to financial contribution alone: is often absolved against any future debt incurred by the organization due to having extended financial assistance for the company at an earlier date or at its inception.).
- The terms which define any particular partnership can vary greatly and it is highly advised that partners discuss all terms thoroughly and consult their attorneys and accountants in order to make the best partnership definition decisions possible for their particular organization of the documents spelling out the details of the partnership relationship.
https://www.law.cornell.edu/wex/limited_partnership
*****NOT WRITTEN BY AI: I actually wrote this and no artificial intelligence was used. I will however, include more articles about specifics regarding partnership construction in business relationships which are AI assisted. AI is scary, but embracing its capacity to asist human knowledge ought not to be ignoired, fdor now please enjoy this article that I created just for you… and your PARTNERS!*****
I wanted to give a basic introduction to a set of business terms which are often misunderstood.
These terms may seem to be very typical, and they are often misconstrued in their original meaning. What is important is understanding their definition within the written terms and construct of a business or financial relationship. When creating a partnership with another person or business it is extremely important for clarity to be brought to the table prior to pulling out the pens. The contract may be ready and you may be excited, but what are you about to sign?
These next few paragraphs might help to define the terms of your relationship and can be referred to as a rubric for understanding and defining the basics of who is who under the umbrella of your business entity.
A Partnership must contain certain necessary items in order to be considered a “Partnership”. If not, then the relationship is titled differently and is subject to a much different classification of business relationship and thus incurs far varied terms and positional restrictions (IE Annual Interest % of financial contribution with mandated monthly payment terms. Terms are always inclusive of annual percentage of interest and additional interest incurs when the payments are not made monthly. Additional interest incurred will compound on unpaid debt from the lifetime of the loan for all money not delivered on time. Collateral must be agreed upon in advance (must include verifiable document to justify the ownership, existence, and value. IE: governmental documents supporting the existence and value of agreed upon property or asset for collateral.)
NECESSARY ITEMS: Without these it is not definable as a partnership.
A partnership:
- Has two or more individuals invested either financially or in another agreed upon manner
- Has its own legal entity and stands alone from any other business (EX. has its own electricity bill.) – Has to be individually taxable and accountable for all of its own profits and expenses without interference from any other entity or revenue generating source.
- Partners share the profits and are responsible for (except in the case of certain “limited partnerships”) the company’s debt and profit losses.
- Open Books: Ledger of company expenses and profits (all losses and gains recorded w daily, weekly, and monthly numbers reported)
- Regular communication to partners (typically done through a monthly newsletter)
- An exit strategy = also known as a back door. Each person or entity needs to have a way they are aware of that allows them to leave the partnership. This may involve incurring a loss, selling their shares,
Remember: You want to partner with people who bring much more than money to the table. You want people who bring things that will help the company GROW and prosper. You want the partners to make more money when the company makes more money because they are then incentivized to do anything they can on the side in order to assist the company in generating more revenue. This can be as simple as exposing the brand on popular and well seen social media channels, telling friends and family about it, recommending people to go there, advertising it on their own websites, and introducing you to other investors. Partners make your network grow.
The following is an excerpt from the Collins Dictionary which is a well known resource for the breakdown and comprehension of business related terms in their legal and socially used capacity. This is where lawyers go to define specific terms for court cases.
Partner in American English(ˈpɑrtnər)
NOUN
a person who takes part in some activity in common with another or others; associate
; specif.,
one of two or more persons engaged in the same business enterprise and sharing its profits and risks: each is an agent for the other or others and is liable, except when limited to his or her own investment, for the debts of the firm
https://www.collinsdictionary.com/us/dictionary/english/partner#google_vignette
The following was taken from Cornell Law School:
Partner
In general, a partner is a co-owner or investor in a business, called a partnership, who shares profits from that partnership with at least one other person and is involved with its operations. Partners are agents of the partnership and may enter into contracts on behalf of the partnership.
- An active partner is an invested individual who participates in the day-to-day activities of the partnership. An active partner is comparable to a member of a board of directors who also serves in a day-to-day position at a company. In comparison to a silent partner, the active partner usually shares greater risk and reward.
- A silent partner is a individual whose role in a partnership is limited to giving funds to the business, also known as a limited partnership. A silent partner is rarely involved in the day-to-day activities of a partnership and rarely attends management meetings. A silent partner may serve as an advisor even if they are not involved in day-to-day management.
[Last updated in April of 2022
https://www.law.cornell.edu/wex/partner
Limited Partnerships Defined:
- Limited Partnerships by Definition: A silent investor is typically referred to as “Limited Partnership”. This person is not typically involved in day to day operations.
- An investor whose investment position within the organization is limited to financial contribution alone: is often absolved against any future debt incurred by the organization due to having extended financial assistance for the company at an earlier date or at its inception.).
- The terms which define any particular partnership can vary greatly and it is highly advised that partners discuss all terms thouroughly and consult their attorneys and accountants in order to make the best partnership definition decisions possible for their particular organization of the documents spelling out the details of the partnership relationship.
https://www.law.cornell.edu/wex/limited_partnership
Remember: Choose wisely and make sure that everyone understands everything prior to engaging.
By: Kyle Corbett
Business Partnership, Strategic Alliances, Collaborative Ventures, Joint Ventures, Partnership Formation, Partnership Agreements, Corporate Partnerships, Partnership Models, Partnership Benefits, Synergy in Partnerships, Mutual Goals in Business Partnerships, Choosing the Right Business Partner, Negotiating Partnership Terms, Risk Management in Partnerships, Successful Partnership Case Studies, Building Trust in Business Partnerships, Legal Aspects of Business Partnerships, Exit Strategies in Partnerships, Innovation through Collaboration, Strategies for Long-Term Partnerships.
More terms: Partnership Models, Partnership Benefits, Synergy in Partnerships, Mutual Goals in Business Partnerships, Choosing the Right Business Partner, Negotiating Partnership Terms, Business Partnership, Strategic Alliances, Collaborative Ventures, Joint Ventures, Partnership Formation, Partnership Agreements, Corporate Partnerships,
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