If you’re going into business with partners and don’t spell out your understandings and agreements in a written contract, you could face a number of arguments as your business venture unfolds and takes off. After deciding that you and your partners are ready to start a business, the first thing you should draft is a partnership agreement (also known as an Operating Agreement or your corporate Bylaws). In this blog, our Chicago business attorney shares what you should include in the agreement.
Name of The Partnership
The first step in forming any business is to select a name. If you decide to choose a business name other than using your last names, be sure to conduct a little research into whether the name is already in use. Even if it is not being used in the way you plan to, you need to be careful not to cause confusion in the marketplace.
Contributions to The Partnership
One of the most crucial elements in your partnership agreement is specifying who will contribute what to the business. You’ll also want to specify ownership percentages. Disagreements over contributions are one of the most common fall-outs in new businesses.
Partnership Decision Making
How will decisions be made between you and your business partners? Will you require a unanimous vote for every business decision? You can’t eliminate the possibility of partnership disagreements, but having this clause in your agreement will help both partners deal with disagreements in a way that is beneficial to the business.
Having a clear understanding of the management duties each partner is responsible for will minimize confusion down the road. Everyone should know what their responsibilities are to the business. These obligations can include financials, operations, sales and marketing.
Disassociation or Dissolution of the Partnership
Breaking up is hard to do, but the sad reality is that many partnerships fail, even when the business is successful. Having an exit strategy helps protect the business so that the partners can benefit from the efforts they put into building the business.
The Prinz Law firm is focused and committed on the success of your business. Our Chicago business lawyer can help draft your agreement and make sure it accurately represents the business plan you and your partners wish to follow. Call us today at 312.212.4450 or contact us online to request a free initial consultation.