When starting a business partnership, it`s important to enter into a partnership agreement that outlines the terms and expectations of the partnership. A partnership agreement is a legal document that sets the parameters of the partnership and clarifies the responsibilities of each partner. Here are some things to consider when drafting a partnership agreement:
1. Define the roles and responsibilities of each partner: It`s important to establish what each partner`s role and responsibilities will be within the partnership. This should include things like who will manage the day-to-day operations of the business, who will be responsible for financial decisions, and who will be responsible for marketing and sales.
2. Determine how profits and losses will be shared: It`s important to outline how profits and losses will be shared between partners. This can be done in a number of ways, including dividing profits and losses equally or basing them on each partner`s investment in the business.
3. Establish a dispute resolution plan: Even the best partnerships can run into disagreements from time to time. It`s important to establish a dispute resolution plan ahead of time to avoid any potential legal battles down the line. This can include things like mediation or binding arbitration.
4. Address the possibility of a partner leaving: While it`s not something that anyone wants to think about, it`s important to address the possibility of a partner leaving the business. This can include things like outlining how the departing partner will be compensated and what will happen to their share in the business.
5. Consider including a non-compete clause: A non-compete clause is a provision that prohibits partners from starting a competing business for a set period of time. This can help protect the business from potential competition from former partners.
Overall, a partnership agreement is an important document that can help set the stage for a successful partnership. By considering these key things when drafting your partnership agreement, you`ll be well on your way to building a strong and sustainable business partnership.