Starting a business is a major opportunity that very few people have the chance to achieve. However, running a business is a major feat. A business owner would be responsible for hiring and managing employees, managing finances, debts and taxes, securing products or machinery and establishing a relationship with customers and investors. That can be a lot for just one person.
For some business owners, it can be advantageous to find a business partner. A business partner can share the duties of a business, allowing each partner to focus on their strengths and bring their unique knowledge and skills to the table. Many businesses survive because of a strong business partner relationship and agreement. When establishing a business partnership, it can help to learn what to include in a partnership agreement. Here is what you should know:
Learn how to structure a business partnership agreement
Every lasting business partnership is built on a strong partnership agreement. There are a few considerations to make when drafting a partnership agreement, including the following:
- Roles and responsibilities: What is each partner expected to do for a business? Establishing the daily duties and long-term goals of a partnership agreement is often the first thing parties should consider.
- Ownership expectations: How much of a business each partner owns can dictate several matters, such as liability issues and control over a business.
- Profit shares and losses: Parties likely expect to profit from a partnership. However, parties could expect to lose capital while running a business. How much should each party expect to gain and lose in a partnership?
- Dispute resolutions: If a partnership does not work out, partners may want an exit strategy. It can help to decide whether a partner would buy out the other owner, merge with another business or liquidate business assets if a partnership can resolve differences.
Before sitting down to draft a partnership agreement, business owners may want to consider their legal options.