Business partners need to make sure that they’re on the same page. Miscommunication can lead to a lot of disputes. Additionally, business partners need to protect their rights and their investment in that company.
But how do they do this? They can use a partnership agreement. This officially establishes them as a business partnership, rather than just working together on a handshake agreement. The following are some key areas that the partnership agreement can address.
How to leave the company
First and foremost, business partners are often concerned about what will happen to the business if their partner opts to leave in the future. The partnership agreement can set up a process to do this, such as stipulating how much advance notice is needed, how new partners can be added or what other steps should be taken.
Roles and responsibilities
The partnership agreement can also be used just to define the responsibilities that each person will have while they work together. Defining these roles can help to limit disputes. This way, both partners can use their strengths and abilities to work together for the good of the business, rather than feeling like they’re working against one another.
Finally, the partnership agreement can address the finances, such as the amount of investment from each business partner or the way that salaries and wages will be paid. The agreement may also address what to do with the income from the business itself, beyond wages. Does it get split between the partners or reinvested in the company?
These are not all of the areas that a partnership agreement should address, but they can help you get started. Make sure you know what legal steps to take at this time.