Your partnership agreement is one of the most important business documents you will ever sign. Many people go into business with relatives, loved ones or lifelong friends and discover too late that they should have had a partnership agreement. A partnership agreement protects everyone involved and can help reduce problems that may occur. To help your business keep running smoothly, outline what will happen during different potential situations and events in a legal framework.
What Should Be In A Partnership Agreement?
Every business is different. Any partnership should outline the rights and responsibilities of all involved. Do this with as much clarity as possible. A well-written and well-thought-out partnership agreement will keep small problems and disagreements from evolving into more serious concerns.
It is best to work with a lawyer when it comes to partnership agreements. Finding competent legal help for drafting your partnership agreement is a must. You should always opt for a professional.
What Questions Should A Partnership Agreement Address?
A partnership agreement can cover a wide range of factors. Here are a few topics typically addressed in partnership agreements.
- Which partner(s) are to receive a draw?
- How is money to be distributed?
- What percentage will each partner receive?
- Who is contributing funds to get the business operational?
- Who will be in charge of managerial work?
- What happens in the event of the death of a partner?
- What must be done in order to bring in new partners?
- How are business decisions made? Are decisions made by a unanimous vote or a majority vote?
- If a conflict cannot be resolved when must the conflict be resolved in court?
With a partnership agreement, all partners involved can start a new business with fewer areas of concern. Without a partnership agreement your business can face a range of disruptions. These disruptions could ultimately spell doom for your business.