Your Total Guide To business

Partnership Agreements

The first rule of going into business with someone is to visit a solicitor and draw up a partnership agreement together. A partnership agreement basically sets out clear rules and guidelines that govern how the partnership works.

Should there ever be dispute or conflict in terms of how the business operates and there’s no agreement worked out, there will be a huge element of uncertainty in terms of who’s right and who’s wrong and it may lead to some unwanted results. The best option therefore is to put your agreement into a document that specifically sets out the key points you and your partners have agreed on.

It’s best to be as specific as possible when drawing up the agreeing and creating a document that caters solely to the needs of you and your partners. Too many people nowadays rely on local constitutions and govern the terms of their partnership by local laws. This is a terrible idea as they might not be helpful in your particular situation.

Before you visit the solicitor to have your agreement drawn up you should consider what you want the contract to specify. We’ve listed some crucial subject points that you and your partners might want to think over first:

Running the business

  • Partners´ duties
  • Decision-making protocol
  • Partners' authority

Financial matters

  • Partnership capital and interest arrangements
  • Allocation of profits, losses and draws
  • Accounting arrangements
  • Making provision for tax payments

Special circumstances

  • Partner retirement procedures
  • Withdrawal or death of a partner
  • Establishing the right to expel a partner
  • Admitting new partners
  • Resolving disputes

There are plenty of issues to consider before you and your partners go into business together. With clear and established rules and guidelines in place you can enjoy piece of mind that in event of conflict, your business will be safe.

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