The Secret to a Good Business Partnership
A business partnership can be very beneficial for everyone involved. Partners may share the costs of founding, operating, or expanding a business, and they can work together to navigate the ups and downs that affect their company. Partners can also provide each other with insight into their different strengths and weaknesses, which will help them determine the best steps to take to ensure that their business can continue operating successfully. However, a good partnership needs ground rules, as well as shared goals and expectations.
The best way to ensure that business partners are on the same page is to create a partnership agreement. This can be done during the business formation process, when a new partner joins a company, or at any time after a business has been founded. Without a partnership agreement in place, disputes between partners may arise regarding the direction of the business, the roles and responsibilities of each partner, the division of profits and losses, or the sharing of important information. By understanding how these issues may be addressed in a partnership agreement, business partners can make sure they are taking the correct steps to protect themselves and ensure that their company can be successful.
Terms to Include in a Partnership Agreement
A partnership agreement can address:
- Percentage of ownership – An agreement should detail each partner’s ownership stake in the business, which may be determined by the amount they have invested or other factors.
- Division of profits and losses – How profits earned by the business will be divided and how losses will be shared may be based on the partners’ percentage of ownership, or they may be allocated equally, regardless of each partner’s ownership stake.
- Decision-making and dispute resolution – An agreement may detail how business-related decisions will be made. One or more partners may be responsible for certain types of decisions, or an agreement may detail the partners’ voting rights in different situations. Partners can also make decisions about how to resolve any disputes that may arise, such as by stating that they will participate in mediation when addressing certain issues.
- Addition of new partners – A partnership agreement can detail the procedures that will be followed when new partners join the company, including the level of investment required and how new partners will be involved in decision-making.
- Termination of the partnership – Partners can make sure to detail the procedures that will be followed when a partner leaves the business, including options for other partners to buy the exiting partner’s ownership shares. An agreement can also address how a partnership may be dissolved if disputes between partners cannot be resolved.
Contact Our Naperville Partnership Agreement Lawyer
With the help of a legal business professional, business partners can make sure they are on the right path. At the Gierach Law Firm, we can help partners evaluate their current situation, determine whether any changes need to be made, and troubleshoot any problems that may arise. We can help you create a new business partnership agreement, or we can advise you on whether updates to an existing agreement may be a good idea. To get help with business-related legal issues, contact our Illinois business law attorney at 630-756-1160.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.