As a new business owner who is going to be working with a business partner, you probably want to have some sort of contract in place. Many business partners will just shake hands or start working together unofficially. But it’s safer to put together a partnership agreement that can help to define the relationship.
Every business is unique, but there are some common elements that show up in many partnership agreements. Below are a few examples that you may want to consider while drafting yours.
Your ownership percentage
First, define how much of the company each person is going to own. Is it a 50-50 split? Does one person own 51% or more? This makes a big difference when considering the company’s value and the decision-making power of both partners.
Your investment and compensation
You also want to talk about the financial side of things, such as how much money will be invested in the business and what compensation is going to look like. Do both business partners expect a salary? Do they just expect to split up the monthly earnings? There are many ways to address these issues, but it’s best for both people to be on the same page.
Dispute resolution tactics
Finally, even if you and your business partner get along very well, it’s wise to remember that disputes can happen in the future. With the partnership agreement, you can determine what dispute resolution tactics you want to use or what steps should be taken to help the business move forward. Addressing these issues in advance can help things go more smoothly if they occur.
At the end of the day, the partnership agreement can help you with your new business on many levels. Be sure you know what legal steps to take when drafting it.