Most start-up businesses prefer to have a business partner to share in the management and cost of running one. However, partnerships are not only limited to businesses. Non-governmental organizations with a common goal may strike a partnership to fulfill their group’s mission. Partnerships between accrediting institutions and government institutions are also not rare.
In any type of partnership, an agreement should be in place. If you plan to have a partnership with individuals or other business entities, here are the things you need to do.
- Put the agreement in writing. Any type of agreement, no matter how noble, won’t be legally binding unless it is written down and signed by the involved parties. Make sure that the responsibilities of each member as well as their rights are fully identified.
A written agreement guides the partners in implementing policies and identifies how the business will go forward in the future.
- Detail the involved parties. Make sure that you correctly identify the names of the parties involved in the partnership as well as their contact information. This is useful in terms of filing and in case there are legal ramifications in the future. Make sure that you properly identify the representative of each party and his/her designation. In addition, include names of witnesses to the agreement.
- Detail the partnership name. This is important if you’re establishing a business partnership. Come up with a suitable name that is agreeable with both parties. It can be a combination of names or a fictional name. Make sure, though, that your business name is unique.
- Identify the responsibilities of each party. Detail the extent of work sharing between both parties. Identify how much investment was provided, and how much control and power each member has. Write down how responsibilities are divided and shared among partners.
- Identify the benefits from the partnership. Detail the allocation of benefits allowed for each partner, as well as the schedule and frequency of returns. Specify how much authority each partnership member has.
- Include additional information. Write it down if you have plans to expand the business in the future, including the procedure for accepting additional members.
Likewise, include a section that details how to handle instances where a member withdraws from the partnership or a partner suddenly dies. Identify how transfer of rights and responsibility is to be handled.
You can also indicate a section on how you aim to resolve conflicts and disputes. This is helpful in case you’re unable to resolve any issue.
Lastly, include details on how to go about changing and modifying sections of the agreement.
- Have a lawyer review the agreement. After signing the agreement with your partner or partners, hire a lawyer who’ll review the contents. It’s also best to have the lawyer ratify or notarize the document. This makes sure that you can prevent legal problems in the future.
If you’re unable to get everything in place, you can hire a business
lawyer who already has experience with drafting agreements. There may be
existing partnership laws in your state that you need to be aware of.
Once you have the partnership agreement in place, you can now focus on performing your obligations.