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What Are Some Important Aspects of a Business Partnership that Should Be Worked Out Ahead of Time in an Agreement?
In order to have a successful business partnership that will operate smoothly, you will want to create an agreement ahead of time that ensures you have an organized structure to your partnership that lets each partner know of their responsibilities as well as how future disputes can be resolved. Some of the basic elements of a partnership agreement are:
- Amount of ownership by each partner – determine how much each partner is contributing to the company in terms of finances and property, and how much each partner will get in return in terms of profits
- A system for making decisions – there should be an agreed upon way in which major decisions are made in the partnership, whether it be by a unanimous vote or some other method
- Authority for different parts of the business – the agreement should also set out a system of management, explaining who is in charge of what aspects of the company, such as accounting, customer service, etc.
- Buyer-seller agreement – you should have a plan for what happens when one of the partners leaves the business because of death, quitting, termination, or any other unforeseen circumstances – it is important to determine how that former partner’s portion of the business will be divided up between the rest of the partners
- Adding partners – there should be a procedure for how new partners will be added to the business, especially when it comes to who gets to be a part of that decision and how much say they have
- Disputes – it would also be wise to add to the agreement a procedure for resolving any disputes that should occur between partners. Some disputes can bring a partnership to a screeching halt, so it would be in the best interest of everyone if you had a way of quickly and efficiently resolving any dispute
Should I Consult an Attorney before Writing Up a Partnership Agreement?
Besides being able to help you with the legal aspects of starting a partnership, an attorney with experience in dealing with start-up businesses can advise you on what makes an effective partnership agreement. Your attorney will be able to advise you not only on what makes a legally enforceable agreement, but also what makes a business-savvy agreement.
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Last Modified: 05-05-2014 09:31 AM PDT
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