** Do the readers of my business plan need to sign a non-disclosure agreement?
A non-disclosure agreement (NDA) can send up red flags to your intended audience. A seasoned banker or venture capitalist is bound by client confidentiality and may find a NDA insulting. Secondly, if the business needs to protect its ideas and concept at this stage of the game than there may not be any barriers to entry for others to enter the market. A simple confidentiality clause at the front of the plan should suffice. In some cases, such as setting up a strategic alliance a non-disclosure may be necessary. If in doubt, consult with a lawyer.
** Is a limited partnership any different?
From a tax standpoint, partnerships serve as great investment vehicles. However, investors are oftentimes very leery of investing in a general partnership, as every general partner can be held responsible for 100 percent of the debts and liabilities of the partnership. To address the issue, most states recognize another entity that is called a limited partnership. Generally, a limited partner’s potential exposure is designed to be limited to the extent of that partner’s investment. For example, if a partner invests $10,000 in a business venture organized as a limited partnership, his or her potential liability would be limited to that $10,000 investment rather than allowing creditors to go after the rest of the limited partner’s personal assets.
The tradeoff is that limited partners must take a passive role in the operation of the business in order to maintain such a status. In many regards, a limited partner would be comparable to a shareholder in a corporation.