A partnership is a common business formation type. If you are preparing to enter into a business partnership, there should always be a contract involved. What are the main things that you need to agree upon with your business partner? Here are 6 essential elements of the agreement.
- Other pursuits – You don’t want your business partner getting 50% of the profits and only giving you 10% of his or her attention. The agreement should limit other pursuits the partners can get involved in.
- Contributions and compensation – How much are you both putting into the business to start out and how much will you both get as returns? Not all partnerships are 50/50 across the board.
- Capital investments – What are the partners obligate to contribute if the business needs more capital in the future?
- Dissolution – If you are going to end the agreement, you need to have the terms of dissolution spelled out in advance so you know what will happen to any remaining assets or liabilities.
- Transfers – If one of the partners dies or wants out of the business for some other reason, is there a clause that allows ownership to transfer to someone else rather than the other partner automatically getting everything (whether they want it or not)?
- Who makes the decisions? – You need to determine in advance who can make a unilateral decision and what decisions can be made without consulting the other partner. This simplifies easy decisions while giving you the opportunity to require that both partners be in on the big decisions.
Business Formation Lawyer in San Diego
If you are looking for a business lawyer to help with your partnership agreement in San Diego or the surrounding areas, Pokala Law APC is here to help. We’re a small law practice that offers experienced business law at an affordable rate for local owners. Call us today at 1-844-695-1487 or contact us by submitting the online form.