Partnerships are a great way to run a business in Texas as you can pool your talents with one or more people. Properly setting up a partnership requires a sound agreement that outlines how the company will operate. Here are several points that you should include when drafting a partnership agreement.
What do partnerships outline?
Partnership agreements are necessary because they govern the relationships between everyone involved, what type of business is involved and how your agreement may be amended. Sections of a partnership agreement include the partnership’s name, the business’s principal office where all documents are delivered, its purposes, products or services offered and the length of the partnership, which can either be for a specified length or in perpetuity. These documents provide an outline for your business for future partnership agreements and disputes.
The nature of your partnership
Other elements include the contributions of each partner, how new partners may be admitted to the business, distributions of profits and losses and how each partner draws from their partnership share. The document may also include items like a non-competition clause, non-disclosure clause and mediation and arbitration steps if disagreements happen.
Why partnership agreements should be detailed
Deciding to go into business and enter a partnership is the easy part; drafting business documents is the hard part. Partnership agreements are complicated documents and should be detailed. Companies and their partners can run into problems due to omissions, and incomplete agreements can lead to disputes that become difficult or even impossible to resolve. This is why it’s important to be thorough when drawing up an agreement.
Partnerships don’t last forever. Being as detailed and honest as possible when setting up your partnership document will benefit you in the future if you face a dispute or wish to end the partnership. Those details are essential to your business dealings and may also apply to future associations outside the company.
