Why Do I Need A Partnership Agreement?
Setting up a business partnership equals a potentially huge monetary and emotional investment into your business venture. Many businesses are close to people's hearts, so ensure you give your metaphorical business baby a chance to survive and prosper. Therefore you must dot the 'I's and cross the't's when you are doing all your initial paperwork. A solid partnership agreement is a part of this. When everything is rosy you do not expect to ever need to refer to a partnership agreement to resolve a business dispute, however if you do end up in this unfortunate situation you will be kicking yourself if you do not have a partnership agreement. So although we always hope for the best, you must also prepare for the worst as a lack of preparation will make the situation a whole lot more complicated if you do end up in a dispute.
A partnership agreement is therefore an essential part of setting up a business partnership. It will be the first point of reference if any dispute needs to be solved. You should contact a specialist business lawyer when you are drafting an agreement; their input should ensure that your partnership agreement is as close to perfection as humanly possible.
A partnership agreement should essentially outline monetary aspects of the business and delegation of responsibilities amongst other things. Not only will you need to outline the allocation of profits and draws on the business you will also need to outline what each individual is expected to contribute to the partnership, be this in money, time, services, advice and more. If you do not do this the business may fall at the first hurdle if people become disillusioned with the amount they have unwittingly taken on.
The agreement will also contain clauses which relate to the decision making aspects of the business. Individuals may be given sole responsibilities for certain decisions which relate to their personal strengths and field of knowledge. Furthermore, management duties should be included in the agreement. How detailed you wish these job role descriptions to be is up to you, your partners and your lawyer. For situations where the partnership wishes to recruit another partner, requires a partner to leave the business, or a partner wishes to withdraw from the partnership of their own accord, you should be able to refer to the agreement and run through a pre-agreed process for each of these matters. This will make any adaptations of the partnership a whole lot easier if your business needs to change and evolve in the future.
Finally as was mentioned at the beginning of this article, the partnership agreement should include a description of the methods that will be used in the event of a dispute. Most businesses decide upon arbitration as a means of dispute resolution as it is generally quicker, so less expensive, than traditional litigation and is completely confidential.
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For Solicitors in Cumbria to help you set up your business, click here. http://www.twpsolicitors.com/ Do you need Kendal solicitors? http://www.twpsolicitors.com/
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