A partnership agreement is a document made to protect both partners in a business. The Law Office of Frederic E. Waczewski, P.A. is a business lawyer Orlando business owners trust to help them with their partnership agreements. Contact us at the Law Office of Frederic E. Waczewski, P.A. to learn more about our services.
1) Percentage of Ownership in the Business
You should always have a record of how much each partner is responsible for contributing to the partnership of the business prior to opening your doors. These contributions are typically used to determine how much of the business is owned by each partner and it is not always a straightforward formula. You must discuss with your partner what seems fair because one partner may be putting in the most physical work into the business but they may not be investing much financially.
2) Allocation of Profits and Losses
Unless you note it otherwise, the allocation of profits and losses will be allocated according to the percentage of the business owned. If you would like to distribute it differently, it must be explicitly mentioned in your partnership agreement. If you are allowing either or both partners to receive draws, you must make sure this is written out in the partnership agreement so that it remains clear what is and isn’t allowed.
3) Who Can Bind the Partnership?
Either partner can sign the partners up for anything. That is, one partner could bind the business to purchase a private jet timeshare even if the business could not afford such an expense. That is why it is important to write down the conditions for this in your partnership agreement to make sure that your business does not take on any liability for a risky decision.
4) How to Make Decisions
When you try to make a decision as business partners for the first time, you will see how difficult this can be and how quickly it can stalemate your company. That is why it is so important to define how decision-making processes will go before you engage in actual business decisions so that the process can go along as smoothly as possible.
5) Resolving Disagreements
It would be impractical to go to court every time you and your partner have a dispute. Not only would it cost you a great deal of money in legal expenses, but it would divert resources and time from your actual business. The only way to make sure that you do not have to go through it every time you have a disagreement is to make sure that you have a mediation clause in your partnership agreement for decisions that cannot be resolved easily.
Do You Need Partnership Agreement Help?
If you are getting ready to enter into a partnership, the last thing you want is a reason for legal action down the line. It is better to have an airtight partnership agreement now and protect each other from issues in the future. That is where a lawyer can help.
The Law Office of Frederic E. Waczewski, P.A. is the business lawyer Orlando business owners trust to assist them with their partnership agreements. If you need help with your partnership agreement, contact the business lawyer Orlando business owners trust and speak to one of our attorneys today.