A business partnership may form for many different reasons. You may be working with someone that you have known almost your entire life, or for most of your business life anyway. A potential business partner may be someone you have worked with in college, innovating with technology or creating a unique business model. Some partners may come on at the founding of the company or later. They may be beneficial additions to the business as they complement your talents and those of others, offering different experiences and ways of doing things. Or perhaps they may be a partner offering to inject the company with capital—and hoping for a good return on their investment later.
The life of a business owner is very busy, overall—and while many entrepreneurs may find that to be a gross understatement—the bottom line is that you may not feel like you have a lot of time to spend on organizational duties for your corporation itself; however, building a solid foundation from the beginning helps promote a path to success later, and it is critical to take care of every aspect of that as soon as possible. This includes creating, reviewing, and signing partnership contracts as soon as any formal partnerships occur.
The partnership contract should consist of basic information regarding who is involved in one or more partnerships, along with any designated titles within the company. Whether you, or your partner, are CEO, CFO, COO, or any other type of officer, it should be noted in the contract. This allows for clear expectations within a business partnership, and especially if other specifics are listed in the contract such as delegation of duties. Creating and maintaining a hierarchy of the corporation results in clear expectations for everyone involved, wards off resentments later, and helps paint a solid picture for employees who should understand who is in charge, second in command, and holding positions on down the line.
The partnership contract should also include information like profit and loss distribution, information and agreements regarding how new partners will be taken on, as well as creating exit strategies for partners should they decide to leave the business. A dispute resolution clause should not be overlooked either as it is a great way to decide on how to handle any legal dispute ahead of time, including how legal fees are to be paid, and in what county such proceedings would be handled.
Do you need legal assistance with a partnership issue or business dispute? If so, 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!