A partnership agreement is a very important document if you’re starting a new business. It’s essentially a contract between you and your business partner.
What does this contract need to include? It’s important to know before you begin so that you can get everything squared away prior to any sort of dispute. Here are a few things you might want to put in your partnership agreement.
A discussion of ownership percentages
You need to know exactly how much of the company you own. Do not just assume that you own half of it because you’re a co-owner. Get it in writing so that you know where you stand. Making any sort of assumptions can put you in a tough spot if you want to leave the company, if you decide to sell it and in many other situations.
How to make decisions
A 50-50 split is also important because it can impact how you make decisions. If one person owns a majority share, they have more leeway to make their own choices. If the two of you each own half, then you need to consider how to make decisions and what to do if a dispute occurs.
How to split the money
As you may suspect, a lot of disagreements between business partners really just revolve around money. Your partnership agreement can help to stipulate exactly how much money each of you should take home from the company, whether that means taking earnings, getting a salary or even getting an hourly wage.
These are only three areas – of many – that you should address in your partnership agreement, but they give you a very good place to begin. Carefully consider the legal steps needed to get all the documentation in place.