If you’re thinking about starting a business in Texas, you might not want to do this by yourself. Fortunately, many business owners get the help they need by establishing a business partnership. Before officially starting a company with your new partner, it’s beneficial to have a business partnership agreement in place. With that in mind, here are a few things you’ll want to have in your partnership agreement.
It’s impossible to officially have a new business partner without defining the details of your partnership. By doing this, you’ll also make sure that your new business partnership complies with state and federal laws. If you avoid this important step, it could create lots of problems for any new partnership.
A partner’s contributions
Another important aspect related to partnership agreements/disputes is what each party is committing to the partnership in terms of money, assets, and time (i.e. is each partner working full or part time), and how income to the partnership we be split between the partners. If this information isn’t in your partnership agreement, it can lead to a lot of future disputes about about whether each partner contributed what was expected, and how the income is to be split between the partners.
Dissolving a partnership
Hopefully, you and your new business partner enjoy a lifetime of sharing ownership of a successful company. Unfortunately, situations happen that leave two people no choice but to dissolve or end a partnership. Considering that, it’s crucial to have a section in your partnership agreement setting out how to part ways. For example, you may one to include a provision where one partner can buy-out the departing partner and carry on the business, and include a formula for determining the buy-out price. If not, you may be forced to liquidate the business and loose the going-concern and good-will value.
In conclusion, several important provisions should be in a business partnership agreement. With this agreement in place, it helps ensure that you and your partners are on the same page before going into business together.