If you and another individual are starting a business, you may find it tempting to skip any official steps. The two of you may just start working together, even designing your branding and coming up with the business name, but without any paperwork in place. It feels like it’s too early to have to take those steps.
But this is a major risk, and your business deserves to have a partnership agreement in place. This can help to protect the business, your involvement and your investment. Don’t skip creating the paperwork. You need to officially define your relationship with your business partner from the very beginning.
What goes in a partnership agreement?
After all, many important details will go into a partnership agreement. These could include things like:
- How much money you each have to invest in the business.
- What ownership percentage you get.
- How the two of you are going to make decisions or settle disputes when you can’t agree on a decision.
- What to do if you want to add another partner to the business, or if someone wants to leave the business.
- How payments should be handled, whether you’re splitting up revenue or earning wages.
- What your goal or vision is for the company.
It’s tempting to skip these steps at the beginning because you assume that things are going to go smoothly, you won’t have any disputes and none of it will be an issue. But you can’t necessarily predict the future. Instead, it’s better to plan for an uncertain future by creating a partnership agreement in advance. Take the time to carefully consider all of the legal steps you should take to do so.
