Forming a business partnership instead of a sole proprietorship can have many benefits, including sharing the workload and the responsibilities of the business. But sharing a business with someone can also bring challenges, especially if roles, responsibilities and liabilities are not made clear from the start. To prevent such disagreements from derailing your business venture, it's important to create a partnership agreement. These agreements create clarity and provide a framework for the partners in a business, and can help to ward off conflicts before they arise.
Who does what?
Starting a partnership is one thing. Knowing what that means in terms of who is responsible for what aspects of the business, who is empowered to make decisions or create contracts is another thing. A good partnership agreement will clarify these roles each partner plays and the power each partner has in the business.
What's your percentage of ownership?
Your percentage of ownership in a business will determine not only how much you will contribute to your business (whether in money, property, or other assets), but can also help determine your share of the financial benefits or losses the company accrues.
How will you resolve disputes?
Will you be going to court as adversaries every time you have a disagreement with your partner? Or will you try to work it out yourselves or enlist the help of a mediator? It's best to work out these decisions ahead of time so you're not left to re-invent the wheel every time you run into problem.
Plan for success
While you can't anticipate everything that might come up in the course of a business partnership, having a partnership agreement can build a foundation of success by establishing predictability and boundaries for each partner to respect. An established business law attorney can help you craft a partnership agreement that best fits the needs of your business.