You may be taking on a new business partner (or vice versa) in an existing company for numerous reasons, or upon founding a company, you and one or more individuals may be in it together, sharing all the stress—and the excitement–along with working on business partnership agreements. Going it alone in business can be difficult, forcing you to bear all the responsibility on your shoulders. And although that means not having to divide up as much financially if the company begins to thrive, there are so many benefits to having one or more partners. Finding capital to open the doors—and keep them open—is one of the greatest challenges in business ownership. But even more importantly, you and your business partner may have dreamt up your business model together, and there may have never been any question about working together in the future.
No matter who your business partner is though, a contract is necessary. Even if you have a solid plan and a verbal agreement in place, consult with experienced attorneys from The Bolender Law Firm for assistance in drafting a comprehensive written agreement so that all partners know what to expect from beginning to end. Here are five major details not to overlook:
- Job titles – whether you decide to use conventional titles such as CEO or not, designate titles for each partner working within the company.
- Delegation of responsibilities – while this may be something that changes from time to time, outlining work duties in the contract can prevent serious misunderstandings later, as well as warding off resentments from growing—assuming the details of the contract are being followed.
- Pay and profit distributions – finances are one of the main issues that can land partners in court against one another, so this is another section of your partnership agreement which must be carefully thought out and prepared. Along with consulting your attorney, you may want to speak with an experienced accountant too.
- Exit strategies – although this may seem awkward to discuss at first, it is a routine subject for many agreements, and knowing that a plan is in place can offer great peace of mind to everyone. Discuss what should happen to business shares in the company should a partner decide to leave. Also, decide ahead of time how to handle any partner’s shares should they die or become debilitated due to an illness or major accident. Even divorce should be discussed as there is the potential for a spouse to fight for a portion of business profits as they relate to personal assets.
- Dispute resolution – this can be easy to overlook when everyone is getting along, but a dispute resolution clause allows you and your partners to decide ahead of time how to handle any potential legal issues. You can outline how a major disagreement is to be handled and where, whether through litigation or alternative methods such as mediation or arbitration, as well as deciding how any potential attorney’s fees would be paid.
If you are involved in a serious disagreement with partners or another business dispute, contact The Bolender Law Firm. Our attorneys are experienced in representing clients in state and federal courts, at both the trial and appellate level. Call us at 310-320-0725 now or submit an easy consultation request online. We are here to help!