As a business owner, establishing a partnership can be an excellent way to grow your company. However, before you sign on the dotted line, it is crucial to ensure that your partnership agreement covers all essential aspects of your business relationship. Here is a partnership agreement checklist that you should consider before finalizing the deal.
1. Define the partnership`s purpose: The first and foremost step is to establish the purpose of your partnership. Clearly define your shared goals, expectations, and reasons for entering into a partnership.
2. Outline the responsibilities of each partner: Define the roles and responsibilities of each partner. Clearly specify how each partner will contribute to the partnership and what their specific duties are.
3. Discuss the division of profits and losses: Determine how the profits and losses of the partnership will be divided between the partners. This includes not only financial contributions but also the value of expertise, skills, and time.
4. Settle the decision-making process: Establish a clear decision-making process that outlines how decisions will be made and who has the final say in the event of any disagreements.
5. Address the issue of termination: Consider what will happen if one of the partners wants to exit the partnership. Agree on the terms for the termination of the partnership, including the distribution of assets and liabilities.
6. Make a plan for dispute resolution: Inevitably, conflicts may arise in the course of a partnership. Discuss how you will address disputes, including the use of mediation or arbitration services.
7. Consider non-compete clauses: Protect the best interests of the partnership by including non-compete clauses in the agreement. This will prevent partners from competing with each other in the same market or industry.
8. Outline the partnership`s duration: Consider the length of time that your partnership will last. Will it be short-term or long-term? How will you evaluate the partnership`s success?
Final Thoughts
Entering into a partnership can be a big step for any business. However, taking the time to establish a comprehensive partnership agreement that covers all essential aspects can help ensure the success of your business relationship. Use the above partnership agreement checklist as a starting point and work with your partner(s) to create an agreement that meets everyone`s needs and expectations.