Business partnership: How to avoid disputes

| Dec 23, 2020 | Business Formation |

If you’re about to or have recently entered a business partnership in New York, you’re likely thinking about the ways you can preserve that partnership for as long as possible. The reality is that some disputes are going to come up in business, no matter how strong the relationship is. That’s why it is important to have certain plans in place for when the inevitable occurs.

Written partnership agreement

If you’re within the early days of your business, the very first thing you must do is sit down to craft a written partnership agreement. Understandably, this can be difficult to do as your focus may not be on future events but rather the success you’re having now. But it is imperative to fill out and sign this document. The following includes a few of the items that this agreement should cover:

  • Division of ownership
  • Partnership compensation
  • Conflict resolution procedures

Set clear and defined roles

Perhaps the most common dispute involves one of the partners acting on something they may not have had the authority to do. Thus, it is important to set clear and defined roles right from the start while adhering to the business and commercial law of your state. This includes things such as who has firing and hiring powers and who can approve marketing strategies.

Always have clear and open communication

In business, any disputes can damage the company, especially when they remain unsolved for a significant period. That is why it is imperative that you have clear and open communication with your partner as soon as disputes arise. Having a procedure on where and how meetings will take place is an added benefit.

Although you can take precautionary efforts to diminish the chances of legal issues occurring during a dispute, it is still wise to have a personal attorney at the ready. This may place you in a better position if you, unfortunately, must go to court.