Not every entrepreneur in New York wants to run a business by themselves. In these situations, having a partner is often helpful. Before choosing a business partner, forming a partnership agreement with this person or people is essential.
Creating ownership percentages
When more the one person starts a business, they’ll need to divvy up who owns how much of this new company. For example, one partner might contribute money to a business upfront for a higher overall ownership percentage. Two or more partners might also agree to split ownership evenly between all parties.
Dividing a company’s profits or losses
Another important aspect of business formation and planning involves deciding what to do with net profits or losses. Establishing how to divide profits and losses can involve somewhat uncomfortable discussions. However, determining this information ahead of time can help everyone avoid arguing about who owes what.
Bringing in or removing partners
Lots of things can change as a business grows. Considering that, your partnership agreement might need guidelines for welcoming new partners. This section of an agreement can also cover how to remove a partner from the business.
Determining what ends a partnership
Hopefully, you and your business partner will work together for long periods. Unfortunately, only some business partnerships will stand the test of time. That’s why most business partnership agreements cover dissolution. If you and a partner dissolve your business, a partnership agreement can detail how to liquidate this shared business. Including what happens if a business partner becomes incapacitated or dies is also imperative.
Business partnership agreements can take considerable time and energy to create. However, these agreements can save everyone involved lots of stress in the future.