Do you have a great business idea you would like to start with your friend, sibling, or co-worker? Forming a business partnership can be tricky without the right legal documents in place. LeBaron & Jensen provides business law service for partnership agreements and other business matters.
Why You Need a Partnership Agreement
Partnership agreements will help you avoid serious problems as the business grows. A properly drafted business agreement will prevent your business from failure if a dispute arises and one partner chooses to leave. Drafting a partnership agreement will define clear job descriptions and salary expectations. Without an agreement in place, you could wind up with company debt and other serious problems.
Decisions and Labor Division
Partnership agreements are established to determine which party is responsible for different job duties. How much labor will both parties put into the company? How much money will both parties invest into the company? You must also define who will purchase equipment and be involved in the testing of the equipment. Itemizing each piece of equipment and item within the company makes it easier to divide the assets when you do need to close the business.
The success of a business will land on the people that operate the company. If you aren’t prepared to operate your business correctly, your company could fail. Choose the best person to be the manager of the company to ensure its success.
Profit Sharing and Financial Management
How will the profits be separated between the partners? The partners can split the profits equally or they can be divided based on the work each partner places into the business. Some companies choose percentages while others will split the amount monthly.
Management of Disagreements Between Partners
There will always be times when the partners are not able to get along. It is important to have a strategy in place to deal with disagreements between the partners. The partnership agreement will protect both parties by defining how the disagreements will be handled. If one partner wants to leave, there must be a buy-out clause in place for this individual.
Benefits of a Partnership Agreement
At LeBaron & Jensen, we work directly with our clients to draft a partnership agreement that is fair for both parties. We will discuss your questions and create an agreement that will meet the needs of all parties involved. Creating a business partnership can put your company on the road to success. Contact our business law firm in Layton to draft your partnership agreement.