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Business partnership agreements: Dos and don’ts

On Behalf of | Nov 27, 2020 | Business Law

When two or more people choose to start or continue a business venture together, clarity is of utmost importance. Who will make decisions? What financial share of the business will each party have? What responsibilities does each owner hold? Georgia business partners can and should clarify all these issues in a business partnership agreement.

A business partnership agreement is a legal document that clarifies the rules for a business and the responsibilities of the partners involved. These documents can make it easier to quickly clear up and disputes or would-be disputes that may arise. They can also guide the overall operation of the business by clarifying the agreements made at the outset. It is highly recommended that any business venture with two or more partners have such an agreement in writing.

A standard business partnership agreement could include clauses about issues like the structure of the business, capital contribution, ownership percentages, and property held by the business. It is also a good idea to agree to how one partner could leave the company or sell their share. This is important to protect the interests of the other party; for example, the agreement could stipulate that the partner must approve of the buyer should the other owner try to sell their share.

Of course, no one enters a business venture with the expectation of major conflict. The thought of dissolving the business or dealing with a dispute is often far from the mind of those optimistic about a new venture. Nevertheless, Georgia business owners can benefit significantly from discussing these issues while on positive and clear terms with their business partner early on. Seeing a lawyer to get a business partnership agreement not only prepares one for possible scenarios, it can also help prevent conflict by requiring important conversations and agreements to happen on the front end.

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