Before opening, you should have each partner`s contribution to the partnership. (People have short memories.) As a general rule, these contributions are used as a basis for the percentage of ownership, but it is not a cutting and drying formula. Effective organizations have a clear hierarchy to ensure that decisions are made quickly and efficiently. This is not to say that the remaining members do not have a say in the operations -- only that there is a clearly defined leader. The same applies to the financial hierarchy, which will ultimately be responsible for the tax requirements that the company must meet. The partnership must contain provisions specifying which members can legally bind the company through non-contractual relationships. These will be seven components that each partnership agreement should contain. Remember, this blog is not designed as a guide for your specific situation. If you are starting a business or entering a business with a partner, please contact Blount Law to have our needs analyzed and help you establish a partnership contract tailored to your goals and wishes. If you want your business to succeed, developing and signing a strong and detailed partnership agreement should be a non-negotiable aspect in starting a business with one or more partners.
Call Blount Law and let us help you establish an agreement that protects your growing business and the rights of each partner. If you enter into a business partnership, it is of course to want to avoid awkward discussions about a future dissolution that might never happen. No one wants to think of a possible breakup when a relationship is just beginning. However, business divisions are recurrent and for many reasons. Each of these reasons may concern you personally and professionally. This is why the partnership agreement should describe the expiry and exit procedures, regardless of the reason for the separation. It is also advisable to include a language dealing with redemptions and transfers of responsibilities if a partner is disabled or deceased. Partnerships often continue to operate for an indeterminate period, but there are cases where a business is destined to dissolve or end after reaching a certain stage or a certain number of years.
A partnership agreement should contain this information, even if the timetable is not set. For more information on the release of a partnership, click here. The name of your business partnership is an important provision because it explicitly identifies the partnership and the name of the company for which the agreement is made.