At some point in your life you may form one of the most important relationships of your life: that of the business partner. While you may experience close relationships with family, friends, and your spouse, the business partnership can be much more unique due to the bond created upon making a new business model, innovation, or concept. This is connected to your livelihood—and your future. Together, you may be able to start a company that not only makes an impact on your community or your industry, but one that also supports your family and creates a legacy that can be handed down later.
Many business partnerships begin early in life as likeminded individuals share a dream and begin building a concept or providing a service. This could be in food service, construction, engineering, design, architecture, software, fashion, or so many other different arenas, but in putting their interests and talents together a small business or even a major corporation could be born. Some partners have been friends since they were kids, and as they work toward creating an actual company, there may suddenly come a point where much more structure and organization is required. As the foundation for a business and accompanying paperwork are necessary, the partnership agreement often comes into play too.
There are several critical elements to address in any partnership contract, to include:
- Titles and responsibilities – establish business titles and assign responsibility to each partner or officer of the company, as well as explaining who has the power to make major decisions. Work tasks should be listed as specifically as possible, and the workload should be discussed at length in the beginning to reduce the chance for growing resentment later.
- The finances – will you all be getting salaries? How will profits be allocated, and when?
- Exit plans – what happens if one partner decides to leave, or if they die? Will the right be given to you and other partners to buy their shares, or will they be handed to spouses or other individuals or entities?
- How disputes will be resolved – in creating your partnership while your relationship is running smoothly, you have the chance to set the tone for resolving any conflicts later. A dispute resolution clause allows you to outline whether conflicts would be solved through litigation, arbitration, mediation, or judicial reference. Details such as what county where proceedings would occur, along with who pays legal fees can be included.
If you have concerns about business or partnership issues, consult with Attorney Shane Coons. Our law office represents clients involved in a wide range of businesses and legal issues, and we would be glad to review your case and help you explore your options. Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com.