A partnership agreement is crucial if you’re starting a business with someone else. You need a contract that defines this new relationship and the company. However, this is a step that many people skip, simply deciding that they trust their new business partner and they don’t need to have it in writing.
This is a major risk if you decide to move forward without a legal agreement. Let’s look at a few of the benefits that you get if you put one in place.
Your position is clearly defined
The job that you do at the company should be defined in the partnership agreement. This should discuss the duties that you have and what is expected of you. It can also discuss the same things regarding your new business partner. It doesn’t mean that you can’t ever branch outside of this area, but it’s good for both of you to have the same expectations.
You know what you own and deserve
The partnership agreement can also tell you what percentage of that business you own, along with the compensation that you can expect. This can become incredibly important if one person wants to move on from the business, and you never want to just assume that you own 50%.
It can provide resolutions
Another benefit of a partnership agreement is that I can tell you how to resolve disputes or work through various problems that may come up. It can be helpful to talk about these things in advance when there aren’t any other emotions involved. The document can offer guidance if something happens in the future.
These are certainly not all of the reasons you should use a partnership agreement, but they show you why you need to look into your legal options.