What to Consider When Having a Business Partner
Hoover Kacyon
July 11, 2021
When starting a business, one issue that may arise is whether to enter into a partnership. When considering partnering with another person, it is important to make a carefully considered decision. Rushing into a business relationship without properly vetting or considering your partner’s approach to business could be a recipe for disaster.
When contemplating the idea of a partnership, you want to ensure you go into business with a person you trust. You will want to run background checks and call references. Be sure that you are completely comfortable with your potential partner. You and your partner will want to discuss any potential issues that could arise later on. Discuss worst-case scenarios and how the both of you would handle those situations. Be sure you carefully read any documents before you sign them, and consider having your business attorney read them as well. Consulting with counsel can help protect you and your business from future lawsuits or intellectual property theft.
Once you have decided to form a partnership, it becomes crucial to lay the foundation for the specifics of the relationship:
- Roles and responsibilities to be assigned
- Decision-making authority will need to be clearly defined
- Your agreement will also need to designate the time, money, and assets that each partner is obligated to contribute, as well as delineate the disbursement of profits and other compensation or losses.
- Your agreement should cover which decisions require partners to be in unanimous agreement.
- It is also important that your contract addresses the issue of dissolution or an exit strategy for the business in the event the partnership does not work out or if one partner decides to leave the business.
- You may want to add several other potential provisions to your agreement for your particular situation, such as expulsion or non-compete provisions.
It is highly advisable that if you are considering entering into any partnership agreement, you consult with a business attorney who can address the unique circumstances of your business. Contractual language can often be full of legal jargon that you might find confusing. Contact an attorney to protect yourself before entering into any contract.
If you believe you need to talk to an attorney regarding the setup of a business, business litigation, contract formation or litigation, or any other commercial or corporate law needs, contact our office at
330-922-4491
or through our
contact page to schedule an initial consultation.
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