The business partnership has some advantages and disadvantages. The partnership can help the business with shared resources and talents. Your family member or a long-time friend can be your associate in business. The start of a business partnership is more like a romantic relationship. As every relation has ups and downs, you may face some troubles in partnership too. You have to prepare for that time and make a partnership agreement for your business’s safety.
Common elements of a partnership agreement:
1. Ownership Percentage: You must record how much share you and your partner own in the business and your contributions. You and your partner’s liability in the business needs to be mentioned in the agreement. Write what each partner will put in the business, which is not only money but also time, effort, equipment, etc.
2. Distribution: You and your partner have to come into a settlement over the proportion each will get from profits and losses. Money is the root of evil; disagreement in finance can fail partnership quickly. So, you have to decide these in advance.
3. Making Decisions: At some point in business, You and your partner may not come to a settlement over a decision. So, you have to think about this at the first point and set a structure in the agreement about how day-to-day or long-term decisions will be taken by management.
4. Critical Development: Sometimes unexpected things happen in life, some of which can seriously threaten your business. You and your partner have to be ready for that unexpected things’ effect on the business, and you should include the ways or rules for solving those in the agreement. What if one partner dies or doesn’t want to continue the business or what will happen after your retirement, buyouts, etc. situations needs to be written in the agreement.
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