It’s important to have a partnership agreement when starting a new business, even if you and your business partner have known each other for a long time. Don’t just assume that your friendship will solve all of your disputes — or keep them from happening in the first place. Issues will arise, and your partnership agreement can help you address and resolve them.
There are almost an endless amount of things you can add to your agreement, depending on the company and your personal concerns. This is a document that you, your partner, and your legal team can all work on together to make sure it fits your unique needs perfectly. That said, here are five common issues that you may want to start with:
- How your partner can sell his or her shares if so desired, or how a new partner can buy their way in.
- What percentage of ownership both of you are going to control and what that means for dividing losses, profits and financial risks.
- Whether or not the partnership is for a specific length or if it’s indefinite.
- What duties you have, what management powers you get and how these are divided between the two of you.
- What to do if you want to close down the company, terminate the partnership or end the partnership while keeping the business intact.
When you start with these crucial areas, you’re undoubtedly going to begin to uncover more concerns and questions that you both have. That’s part of the reason this process is so valuable. Having an experienced legal team on your side can help you get the proper paperwork in place.