When you decide to go into business with another partner, it can bring you a lot of perks and bonuses that being a solo business owner does not come along with. However, it can also result in extra hardships and hurdles that you should know to expect or prepare for in advance.
Thus, it is most important to draft a solid, understandable and all-encompassing version of a partnership agreement that both you and your partner(s) can use to navigate your business relationship moving forward.
Division of assets, profits and liabilities
The U.S. Chamber of Commerce discusses how to write a partnership agreement. General partnerships make up the most common type of this agreement. It guarantees an equal or equitable division of assets, liabilities, profits and costs among two or more people. Thus, every person involved in the partnership will hold liability for the actions of other partners.
Your partnership agreement can cover how you will handle these divisions in more detail. It can discuss how you may handle financial emergencies, or scenarios in which you must dissolve the business or a partner wishes to withdraw. You can insert plans for events that may cause arguments to erupt among partners, too.
Reflecting ownership
Partnership agreements should include the percentage of ownership and amount each partner will contribute. It should touch on the aforementioned divisions, along with the name of the partnership. It should also focus on the authority of each individual in a partnership, and how this authority will interact with other members within the partnership.
If you set this all up in advance, you will run into far fewer issues moving forward.