Whether starting a new business or looking to grow a current one, a partnership can be beneficial. When considering this option, it is important to put a partnership agreement in place.
This business agreement aids in establishing the parameters of the working relationship. As such, a proper agreement must include a few key elements.
In a business partnership, all partners have a role to fulfill. The partnership agreement should clearly outline what those roles are, as well as their duties. Some common stipulations include:
- Decision-making protocol
- Ownership percentages
- Profit and loss allocation
- After-death procedures
Along with the expected, the agreement should also outline any partner restrictions and the possible . Parties may add any additional terms that may be unique to their industry or particular company, as long as it is in with the requirements of the law.
Differences of opinion are likely to arise at some point during the partnership. Including conflict resolution measures in the agreement can help to make the resolution process easier. In the case that a disagreement cannot be resolved, it may also be beneficial to include terms of dissolution.
Write it out
As with any agreement, you should put your partnership agreement in writing and submit it through the courts. Taking this time can help ensure all partners are on one accord and understand the expectations of themselves and others. Also, it can help to eliminate or decrease the chances of litigation in the future.
While these aspects are key for a partnership agreement, additional aspects may be beneficial, depending upon the partnership type and the type of business. It may also be beneficial to review the business laws in full and stay abreast of any changes, to ensure that the agreement remains valid.