If you are launching your own business and you wish to make it a partnership, creating a partnership agreement may be among your preliminary tasks. Partnerships can help your business thrive under the leadership of more than one knowledgeable, qualified person, but they can also create unnecessary troubles and lead to potential legal hardship if you do not set clear guidelines from the outset.
Because partnerships involve having more than one person in charge, it is important that your partnership agreement clearly stipulate everyone’s specific duties, responsibilities and stake in the company. The more detailed and thorough your partnership agreement is, the lower your chances are of having to litigate any business disputes that may arise down the line. So, when crafting your partnership agreement, make it a point to include the following:
Ownership and distribution details
It is critical that your partnership agreement detail exactly how much stake each partner has in the company. It is also wise to include comprehensive information about each partner’s specific responsibilities with regard to hours, clients and so on. Similarly, you will want to include salary information for each partner, and you should also set guidelines in your partnership agreement about how to divide your business’s profits between or among partners.
Chances are, even if you and your partner or partners enter into business together with a similar mindset and plan for your company, situations inevitably arise where you will disagree, and someone will need to have the final say. Adding information about who has decision-making authority when differences of opinion exist is a solid way to reduce potential conflict among partners.
Another important aspect of a partnership agreement involves adding information about what steps you would take, should you want to end the partnership entirely. You will need to develop an understanding of Ohio’s laws regarding business dissolution when crafting this part of your agreement.
While drafting your partnership agreement can take time, it is an essential step for people who want to protect their rights within a shared business.