You’ve found the perfect partner for your business. You get along and feel that you have similar visions for what the company is going to be. Though you feel confident, it’s still important to put it all in writing.
You should always create a partnership agreement when going into business with another person. This document will provide the foundation for how you will work together and what you expect of one another. Here are some topics that you should address when creating your agreement.
Business information
Begin your agreement with the basics of the business. What is the name? Where is the main office that will be used as the mailing address? You should also say what law governs your business, meaning the state or local authority under which you will fall.
Foundational partner information
Next, move on to discuss the foundational partnership information. This should include a statement of who the partners are and what type of partnership you are entering. Consider if you will be general or limited business partners. Then, determine if there is a set length to the partnership or if it will continue until you end it manually.
Partner entrance plans
Discuss the circumstances under which individuals enter the partnership. What contributions will each bring? Similarly, how does that determine the allocation of profits and losses? You should also decide how new partners may be brought in.
Partner relationship information
Then, consider the daily functions of your business and the partners within it. Determine each person’s rights, responsibilities and duties. Create a standard of conduct for everyone to follow. Add in your strategies for decision making, communication and time off.
Partnership end plan
Though you probably don’t think your partnership isn’t going to work out when you begin it, you should still plan in case you have to deal with that. What happens when one partner wants to leave? Or what happens if there is a death?
Additional clauses
You should also think about including other legal clauses to protect your business. These can include non-competition, non-disclosure and non-solicitation agreements. You should also plan for dispute resolution strategies like mediation or arbitration.
As you create your partnership agreement, you should engage a legal professional to help you. They can assist you in choosing the right plan for your business and ensure that the agreement is legally binding.