A Partnership Agreement Guide
Setting up a business partnership can provide you with several strategic advantages as a business owner. With a partnership, you do not have to set up a corporation or a limited liability corporation to do business. Part of the process of getting started is setting up a partnership agreement with your business partners. This agreement outlines the nature of the relationship and helps avoid any confusion.
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Basic Information
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When creating a partnership agreement, start out by including basic information, such as the names of all the business partners. You also need to include the name of the partnership, which could simply be all the partners' names or a specific business name that you come up with and register. If you have a business address, include that on the partnership agreement, as well.
Shares
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Include in the partnership agreement information about how much of a share each owner has in the business. In some partnerships, the profits and losses are split equally among all the partners. In other partnerships, one partner in the business receives a larger percentage of the profits and losses than all the other partners. It is critically important to include this information in the partnership agreement so that there are no disagreements later on in the business relationship.
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Responsibilities
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Put the responsibilities of each partner in the business in the partnership agreement. Also, outline all the various responsibilities that come with running a business. Some partners might play a large role in the day-to-day management operations of the business. Other partners might play a more silent role and be called on only for small tasks from time to time. Regardless of the arrangement, outline all the responsibilities in this document before the partnership begins.
Adding and Removing Partners
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Another section of the partnership agreement should deal with adding and removing partners from the business. Partnerships dissolve frequently in the business world for numerous reasons. Sometimes, partners no longer get along and wish to go their separate ways. In other cases, an additional partner is brought into the business for financial support. Before the partnership begins, determine how new partners can be added. This might entail specifying the amount of money someone needs to invest to get into the partnership. Also include how partners can be removed.
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