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Create a partnership agreement when adding someone new

On Behalf of | Feb 10, 2020 | Business Law |

Maybe you started your business on your own, and it did well enough to be stable. Now you’re thinking that you want to bring on someone else with a different skill set to take it to the next level. You need a business partner.

This is going to transform the way your business operates, and one of the most important things you can do is to create a partnership agreement. People sometimes skip this step just to speed things along, but that’s very risky and you could end up regretting it in the future.

A few things that your partnership agreement may mention include:

  • The official day that you begin working together
  • If you have the right to remove that partner
  • What they need to do if they want to exit the business
  • What ownership percentage the two of you will have
  • How much you will each get paid
  • How long the partnership lasts for, even if there’s not a definite end date
  • What duties and responsibilities you will each have
  • How you will resolve any disputes
  • What benefits you will get
  • What the two of you need to do together if you want to add a third partner — or more — in the future
  • What happens if one of you passes away; does the business go to the other partner entirely, for instance, or does your ownership pass to your family?

Every business may have unique details to add, as well, but this should get you started. Just make sure you know exactly what legal steps you need to take.