Many small businesses start with more than one person involved. Sometimes, two friends come up with a plan to launch their own coffee shop. Or two co-workers decide to create their own consulting firm after getting laid off. Starting your own business venture like this is exciting and a little intimidating. You want it to succeed and your business partnership to remain strong.
In order to do that, you should create a business partnership agreement. The advantages of having a legal partnership agreement include the following:
- It names all the partners involved.
- It includes job descriptions for all the partners involved, including what their specific duties will be. This can help reduce conflict over who is responsible for what.
- It can reduce the chances of a conflict over money. The partnership agreement should state what level of investment each partner has in the business for startup costs and ongoing expenses. It also should document how the partners will split the business profits.
- It gives direction as to how another partner can be added to the partnership. Do all partners need to unanimously agree to add someone new? Will a majority vote prevail? That should be outlined so everyone knows what will happen in this situation.
- It can outline how partners will solve any business disputes. This language can include seeking alternative dispute resolution (mediation, for example) to help resolve any major disagreements.
- It gives direction on how a partner can exit the partnership and how both partners can terminate the partnership if they decide to shut down or sell the business.
Launching a business is a lot of work. It can really tax your relationship with your business partner or partners. Creating a business partnership agreement with an attorney can help reduce conflict with your business partner, so you can focus better on working together to reach your business goals.