Silent Partner and its Benefits in Business

One of the keys to business financial success is having a silent partner. Business owners can receive financial assistance in starting and maintaining their business, while silent partners will get equity in the company. This partnership is one type of relationship that has many advantages for the business owner as well as the partners.

If you are interested in becoming a silent partner, it is important to get to know this type of partner and the benefits that can be obtained.

Benefits of Being a Silent Partner

Silent partners are investors who do not involve themselves in day-to-day business operations. In practice silent partners, also referred to as business partners. Even in a partnership, the silent partner cannot make decisions – either for or about the company.

Therefore, silent partners need to respect and trust each other. Although it looks limited, a silent partner has benefits for both parties. Business owners can receive financial assistance to start and maintain their business, while silent partners get equity in the company. Here are some other benefits of being a silent partner.

1. Passive income

Depending on the agreement, the silent partner can invest one time or gradually over the course of the partnership. Payment time also can be discussed. You can pay monthly, quarterly or even annually. These terms will be described in your partnership agreement.

When investing, of course you will benefit. The amount of profit you make will depend on how well the business is doing and the arrangements you have in the business. This means that you may end up with less profit than an active partner, especially if you invest less than others.

2. Easy investment

Another benefit of being a silent partner is the opportunity to be involved in business. Even if you have little business knowledge, you can still get involved. Most business people, including active partners, have in-depth knowledge of the business industry and marketing methods.

Meanwhile, to get involved in business, silent partners do not require skills in the corporate industry. This means you have more freedom to choose the investment you want. Because you don't need to limit yourself to a certain business industry.

3. Limited liability

Once entered into the agreement, the silent partner has less responsibility for business operations. In contrast to active partners who can give most of their time to run the business. They have to make important decisions, such as deciding which employees to hire and lay off from the company. While the silent partner, no.

Therefore, a silent partner is the right choice for those of you who don't have much time, but still want to keep up with the business. Having limited responsibilities also allows you to focus on other work and reduces stress.

4. Load a little

Not only do they have smaller responsibilities, silent partners also have less burdens. Since you are not involved in the day-to-day operations of the business, you are not required to provide business input or strategy.

With the right legal documents, every loss that the company suffers, a silent partner will have little impact. You will not be responsible for paying the company's debts. This makes silent partners a safer investment than active, or public, partners.

Therefore, after a business owner registers a company and finds a silent partner, there must be a written agreement as a documentation of the requirements. This is done to ensure both parties understand the legal aspects of the partnership, as well as each other's expectations.

Even if you can become a silent partner without much experience, you should still be careful. Before investing your money, it's a good idea to measure the risk. Protect yourself by researching the companies or partners you'll be involved with.