Build a Compact Partnership Agreement

There are different ways to put up your own business and survive the industry. Sometimes you need help in making it through the business world. In the event that you decide to go on a partnership for you to protect and nurture your business, you should first take care of building a partnership agreement so that you can ensure your legal and financial safety as well as your investments.

When building a partnership agreement, there are quite a number of vital items you should put into mind.

Put all agreements into writing right away.

It is imperative that you set out to put into paper whatever you have settled with your partner. Agreements on rights, responsibility, and financial aspects should be recorded as soon as possible.

Having a written document to refer to during conflicts would make it easier for both parties to come to a resolution. Without the guidance of written agreements, small issues might lead to major legal disputes. Additionally, lack of written agreements that settles the conflict will allow the state laws that oversee your enterprise take control of many facets of your business.

Taking a note on these preliminary pointers will present you the benefits of a written partnership agreement.

• The written partnership agreement will allow you to organize and develop the working relationship you have with your partner which in turn will be very promising for your business.

• It will allow you to settle and institute the financial shares of you and your partner- inclusive of profits and losses- and also precisely define the responsibilities of each partner.

• It will settle disputes on what course the business should take if in case a partner flees from his or her portion in the business.

• It will allow you more space to add and incorporate vital guiding principles to the business.

Prior to putting down all aspects into the partnership agreement, there are crucial areas needed to be considered and deliberated wisely and carefully:

1) The business partnership's name should be given careful consideration. There are different ways to come up with a business name. You can combine both your names or operate under a fictitious enterprise name all dependent on what you and your partner agreed on.

2) Financial offerings of each partner should be clearly defined and recorded prior to launching the business. Fix the percent of ownership that each partner is bound with.

3) Each partner's allocation of profits, losses, or draws should be established.

4) Clear up the matter of power of each partner in the business.

5) A system wherein both partners of the business have equal part in the decision making procedure of significant issues in the business should be established.

6) There should be a clear line when it comes to the division of tasks between partners.

7) Growth opportunities should be guided with proper procedures like permitting new partners in the business.

Procedures to suitable management of a withdrawing partner should be taken into account. This is the section where a buyout scheme can be included.

9) Configure a process in which to settle disputes or conflicts.

10) Always consult with a business lawyer to be able to build a compact partnership agreement that will effectively guide and help your business along the way.

Faith Farrell is an established business consultant. If you are in the process of building your own business partnership, it is wise to consult a business professional regarding a partnership agreement. You can look into a partnership agreement template so you can have a reference to model your own contract.