Many people in Texas set up small businesses with their close friends or family. Although your partner is your family member or closest friend, you still need to negotiate an official partnership agreement with them. A partnership agreement is a legal document written by partners in a business to determine the roles and shares of each partner. The document comes in handy in case there are disagreements between the partners.
Drafting the agreement
According to business law, partnerships should be formalized by a written agreement. Regardless of the size, age or revenue of the business, a partnership agreement is essential in preventing legal and financial disputes.
First, you need to identify the mutual goals that you have with your partner. If you both wish to improve the business, you can discuss the projected growth. While discussing the development, check how to divide the investment capital and assess whether debts are necessary. You can also discuss other areas where the business can venture.
Secondly, discuss the shares of each partner and how the profits will be divided. Profit requires mutual interest from the partners. If you plan on creating employment, you need to discuss the various employment policies.
Goals and conflicts are normal in any partnership. Your goals need to align with your partners’ while addressing any disputes. Since you have personal goals, you should also incorporate them into the business.
Negotiating the partnership agreement
Before starting the negotiations, understand that there might be deal-breakers. Discuss the goals that you want to set. To address the conflicts, you may want to bring in third-party professionals to mediate.
Do you plan on drafting a business partnership agreement? It’s recommended that you consult an attorney for more guidance.