Partnership agreements are an essential part of any business partnership. They help outline each partner’s expectations and responsibilities and can help prevent misunderstandings down the road. When drafting a partnership agreement, there are three key things to keep in mind:
The purpose of the partnership
The purpose of the partnership is probably the most important issue to address in a partnership agreement. What are the partners trying to achieve? Is it just to share expenses and profits, or do they want to create a business together? If they have different goals, this can cause problems down the road.
The financial contributions of each partner
Another excellent way to avoid problems down the road is to document each partner’s financial contributions. This could include how much money each partner has invested, what they’re contributing in terms of time and resources, and what percentage of ownership they will have in the company.
The decision-making process
Partnership agreements can also specify how decisions will be made within the partnership. Will it be a majority vote? What if partners can’t agree on something? These are all critical questions to answer in advance.
To conclude, by taking the time to draft a partnership agreement, you can help ensure that your partnership runs smoothly and without any major disagreements.
