What is a partnership?
A partnership is a business that is neither a corporation, nor an LLC. However, it is owned by two or more people. You do not necessarily have to create a written partnership agreement. If you do not have a written agreement, the partnership will begin as soon as the partners start the business.
What is a written partnership agreement?
The partners who began the business write and sign a legally binding document known as the written partnership agreement. This agreement dictates how the partners will run the business. The need of the partnership agreement is to foresee any future issues between the partners and create a method for dealing with those issues. The agreement is much like how contracts lay down the rights and responsibilities of two parties. While such an agreement is not mandatory to start a business together, it could prove to be an invaluable tool in avoiding future issues.
How will a partnership agreement benefit my business?
This agreement will allow the partners to figure out how they will deal with any future issues that the business may face. For example, what will happen if one of the partners decides to leave the business? Without a written agreement, such a scenario can pose serious legal complications for the other partners and the business itself. However, the agreement can dictate what that partner will be entitled to, the process by which he would leave the business, who would take over his responsibilities, etc. Without an agreement, a business can also be subject to the default terms of state partnership laws.
The agreement can be as general or specific as the partners like. Of course, the more specific the agreement the more effective it will be. It should dictate how partners will manage their business, what their respective duties will be and how they will deal with any possible issues in the future.
If you find yourself in need for a partnership agreement, do not hesitate to contact Regina Gordon Law Office. Fill out a contact form online or call the office at (347) 770-7507.
This post is for informational purposes only. It is not intended to be, nor should it be construed, as legal advice. Always consult an attorney, licensed in your state, before taking legal action.