If you are starting a business with someone that you already know well, you may decide that you don’t really need a partnership agreement. Maybe this person is a close friend from a business where the two of you already worked together. Maybe they’re even a family member. For whatever reason, you feel like you can just trust each other.
As optimistic as this viewpoint is, it’s always wise to have a partnership agreement in place. Let’s consider a few of the ways that it can help you.
It defines your roles
First of all, the partnership agreement makes it clear what your roles are going to be within the company. It can help to define the ownership percentage of that company that each of you hold. It can set up which duties and obligations you each have, and which are supposed to be granted to the other individual. This can help to limit disputes and it also ensures that you know where you stand from a financial perspective.
It can help resolve disputes
There can be situations in which disputes are still going to arise, and then your partnership agreement may help you resolve them. It can set up a system that you’ll use to find a solution or compromise. It may even lay out the guidelines for how one person could exit the business. You obviously hope that none of this ever happens, but having a partnership agreement means that the structure is in place and you know that it’s going to go smoothly.
It can help your business thrive
At the end of the day, having a partnership agreement that clearly shows you what your role is and that helps to eliminate disputes can really help your business thrive in the long run. You spend less time in conflict with the other business partner, and you know that you’re always working toward the same goals. You have the same vision, and the path to get there is well defined. This can save you time, stress and money.
Setting up your agreement
If you don’t have a partnership agreement yet, it may be wise to get one put in place. Be sure you know about the different legal steps you need to take.