A business partnership can be between friends, family, colleagues or new acquaintances. What matters is that the partnership is beneficial to the company.
As with any business relationship, partnerships should be governed by contracts. These are called partnership agreements. What should a partnership agreement contain?
Terms about the money
Often, a partner is required to invest capital into the company. The partnership agreement should outline exactly how much money is required and whether or not further investments are needed in the future.
In addition to investments, the partnership agreement should outline how profits are shared and distributed. Partners are often awarded payment on the basis of their share of investment and ownership. However, a business is not guaranteed to make a profit, especially if it is a new business. Thus, the partnership agreement should also include terms that cover what happens in the event the business makes a loss.
Roles and responsibilities
The roles and responsibilities of partners tend to be quite different. For instance, a partner may invest capital but want to remain a silent partner. Another partner may want to take a more hands-on approach to running the company. The roles and responsibilities of each partner should be clearly outlined in the partnership agreement.
Terms of dissolution
Few business partnerships last indefinitely. Therefore, the partnership agreement should include dissolution terms. When a partnership comes to an end, it is important that this happens smoothly. Uncertainty and partnership disputes can devalue the company.
To learn more about partnership agreements or resolve a partnership dispute, it will help to seek legal guidance.