The Ms. CEO Show

Dear Ms. CEO,

I am a photographer and I am partnering with a friend who is a graphic artist to start a full-service visual design agency. We are trying to decide between forming a partnership or an LLC; what do you suggest?

Kia in Atlanta - 12/1/08

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Dear Kia,

Congratulations on launching your new business!  The advice provided here is general and for informational purposes only.  Always consult your personal certified advisors (accounts and attorneys) before making these kinds of decisions.  Now, on to the answer: There are only two reasons (other than image) to set up a business entity: tax advantages and protection from legal liability.  Sometimes partnerships are right, but I generally would advise against them.  They offer no greater tax advantages than an LLC but they do come with a potential pitfall when it comes to legal liability.  Why?  Because once you form a partnership with someone, anything that person does becomes your liability too.  Bad business debts, civil lawsuits, and more. An LLC is the simplest, most effective way for you to go!

-Ms. CEO