Certain needs in business necessitate a partnership. Sometimes, a partnership is just a feasible option to help your business operate with fewer limitations. Partners can bring financial security to a company and may even bring experience and a fair dose of knowledge to the table. Other partners are silent and do not try to integrate within areas of operational management. Understanding the roles of partners and dictating that from the get-go may help over the years when a partner may be tempted to overstep his or her role.
It helps to have a written partnership agreement in place to refer back to when needed. If you are already in a partnership, this would be something you could do to clarify roles now and moving forward.
A partnership agreement should dictate:
- The ownership percentage of each partner and the contributions that partner is expected to make.
- What authority each partner has to make decisions regarding the business and who will be making the important managerial decisions.
- What will happen when a partner passes away or voluntarily withdraws from the partnership.
- How any draws, profits or losses will be distributed.
- How new partners are brought in.
- Dispute resolution procedures.
- And finally, the name of the partnership. For instance, will it be all partners’ last names? If so, in what order will the names be listed?
Making the decision to bring partners into your business is not something that should be taken lightly. Anytime you introduce new people and ask for a contribution or allow them authority, substantial changes may be made that can be hard to reverse. Having a written partnership agreement drafted by an Ohio firm knowledgeable in business formation and planning may mean the difference between a partnership that causes issues and one that seamlessly generates growth and upward momentum.