If you and a business partner are looking to open a company together, you may have come up with the idea without getting formal paperwork in place. That’s fine, but make sure that you take the time to create a real partnership agreement before the business opens.
There are a lot of advantages to having a partnership agreement in place, and it can protect you and your interests in the company. We will take a look at some of the advantages below.
Defining responsibilities and rolls
First off, the partnership agreement gives you each a specific role and lays out the responsibilities that you’ll have at the company. This ensures that everything gets done and that the two of you don’t have disputes where you both believe you’re in charge of the same area.
Setting up ownership and pay
The partnership agreement can also be used to state unequivocally how much of the business you own and what each of you will take for payment or salary. Many partnership disputes happen over money, so defining this in advance is beneficial.
How to resolve disputes or leave the business
Finally, your partnership agreement should also give you some structure for resolving disputes and what tactics you should use. There are cases where disputes may not be solvable, and one person may want to leave the company. The agreement can also define the steps that need to be taken and show how someone would move on from the business without harming their business partner or the company itself.
These are just three of the things that a partnership agreement can do, but you can already see how important these documents are. Make sure you know how to get them set up in advance. We help partnerships get started on the right foot. Contact us for help.