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All About Partnership Agreements

New businesses face lots of risks, no doubt.

One of the best things you can do if you are beginning a business with a partner is to put together a partnership agreement.  This legal document clearly spells out the rights and responsibilities of each partner, which can minimize the chance of a legal dispute down the road.  There are lots of things that can sink a new business, but a lack of clarity concerning job responsibilities or other issues does not have to be one of them.

Each state has a uniform partnership law, but a partnership agreement can provide further specifics.  Here are some of the things that a partnership agreement might address:

  • What procedure is in place if one partner wishes to leave or passes on?
  • How are profits going to be shared?
  • What are each person’s management responsibilities?
  • How does each partner contribute to cash flow?
  • What is the reach of each partner’s authority?
  • How would a new partner be added?
  • Which partner holds title to physical property?
  • How are salaries computed?

If you have a new business and are interested in a partnership agreement, an experienced attorney can help you draft this legal document.  It could mean the difference between success and failure, between a healthy partnership and a failed friendship.

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