Partnership Agreement Sample And Tips To Guide You In Your Business
Starting a business is not that easy. But as with any business, documentation and records are integral in every transaction. Even if that transaction is with a friend or relative, everything has to recorded, stated and signed because money is involved and things have to be clearer stated where money is involved. And if you are planning to go into business with a friend or with a relative it is important to draft a partnership agreement. And you do not need a lawyer to write a partnership agreement, because partnership agreement sample and templates are availabel online to help and guide you in drafting one.
In drafting a partnership agreement it is vital to include information such as the name of the business or business partnership. The name is of course something that both parties agreed upon. And below the name of the business, the full name of all the partners or business associates involved should also be stated. The nature of the business as well as the exact date when the business started should also be stated clearly in the agreement. This information is important when you and your business partner deal with other business people.
It is also important to make other information clear such as exactly how much you and your partner are investing in the business. This will show how much both of you are investing in the venture and will also determine how much or what percent of the business you own. Who owns what percentage of the business is also crucial in deciding who has the final say business decisions, because the person with the most share will also be the one who has the final say. Most people recommend that it is best not to enter into a 50/50 partnership, and that it is better if the partnership is at least 51/49 so that it is easy to pinpoint who has the final say especially if problems arise. This is of course entirely up to you and your partner. You can of course opt for the 50/50 partnership as long as you both are sure that you will be able to talk about and agree on decisions regarding the business. In a partnership, unity and cooperation are vital in the success of the venture.
Other clauses such as when and how the payback will happen should also be included. This is only applicable of course if the investor does not own a part of the company. If you or your partner continues to be part owner of the company then payback will only happen through the revenues made by the business. In the partnership agreement, it is also vital to state that will happen if one of the partners decides to leave the business – whether he or she has the option to buy or sell out his/her share.
A partnership agreement is crucial before entering into a partnership because this document will provide the structure of your business with respect to each partner’s share, responsibilities, liabilities, etc. It also a means of protecting you and your investment. And like with any document, it should be duly signed by both parties as a proof that both have agreed on everything that is stated in the agreement.
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