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What should you put in your partnership agreement?

If you’re starting a new business, you may be doing it with a business partner. Many people want to be entrepreneurs, but they know they need assistance or they want to bring on someone with other business skills, financial resources or something of this nature. They decide to start a partnership where they both work together as co-owners.

If you’re thinking of doing this, then you want to draft a partnership agreement. This can help to define your business relationship and protect the company from disputes. Below are three things you may want to put in the agreement.

Questions about payment

First and foremost, many disputes revolve around money. How are you and your partner going to get paid? Do you take a set salary? Do you get an hourly wage? Do you just get a percentage of the business’s earnings?

Ownership percentages

It’s also important to define how much of the business you each own. It may be very simple if you both own 50%, but this means you have to work together to make decisions. If one person is a majority owner, at 51% or more, they may be allowed to make some decisions on their own. Either way, both of you need to know where you stand.

Specific duties and rules

It may also be wise to define your specific roles within the business. Maybe one person is supposed to be in charge of marketing, while the other is in charge of creative decisions. Maybe one person is supposed to manufacture products while the other does sales.

Drafting a business partnership agreement can help your business be successful for years to come. Be sure you know the legal steps to take.