Starting a business with a partner? It may be difficult to talk about problems during your honeymoon stage, but that’s exactly when you should.
Your business formation attorney will work with you and your partner to draft a partnership agreement to help protect all those involved in the business relations.
A written partnership agreement helps guide you when questions arise and can provide clarity when presented with the following questions:
What is each partner’s investment? Is one partner investing cash and the other services?
Do any of the partners own equipment that you’ll use in the business, and does that fact deserve consideration as part of the start-up investment?
What are the responsibilities and duties of each partner? How is each involved in day-to-day operations?
If a partner becomes disabled, how long will he or she get a share of the profits? If a partner dies, what happens to that share?
Can the partners have other outside partnership interests? In particular, can interest be in similar or competitive businesses?
What will you do if one partner wants to withdraw?
How will you restrict partnership-interest transfers? Can a partner transfer his or her ownership to anyone, or can you limit that transfer?
Can a partner pledge his or her interest as collateral for a loan?
Are additional contributions mandatory? If the business needs capital in the future, are partners required to make capital contributions?
How will conflicts be resolved?
It is the best practice that every business partnership – regardless of the relationship of the individuals – begins with a written agreement. A written agreement goes a long way to ensure all those involved truly share the same vision for the business.
Contact the Law Offices of Parnell, Michels & McKay
When forming your business and choosing the correct entity, contact the attorneys at Parnell, Michels & McKay, PLLC. We offer advice to all types of corporations, limited liability companies, and other business entities designed to achieve each client’s goals and needs. Contact us if you need our assistance.