When a handshake is not enough: why you need a Partnership Agreement
What is a partnership agreement?
A partnership agreement establishes the terms of a business relationship between two or more parties. It is designed to protect the obligations and liabilities created by any transaction between the parties, including intellectual property rights, intellectual property ownership rights and relationships with vendors, suppliers and customers.
In today's business world oftentimes deals are made over email or on phones. This lack of clarity can lead to complications down the road for both parties involved that might not have been anticipated in advance. The risks involved in making agreements via phone calls or emails include potential disputes about contracts that were made verbally, not understanding what was agreed upon or misunderstandings about how any contract will be executed.
In addition, a partnership agreement can be beneficial for tax purposes. If a partnership agreement is drafted properly, partners can allocate their profits, losses and other tax items in the most favorable manner.
So what should be covered in a partnership agreement?
The main points of a partnership agreement should include:
- Name and short description (purpose) of the company
· What kind of business is the company involved with? For example if it is a software company or an online publishing house etc.
- Who are the partners?
· The names, addresses and phone numbers of all partners.
- Names and short descriptions of each partner's role in the company. For example if one partner is the CEO, COO and CFO while another is an HR executive then the roles should be identified. This will allow the partners to clearly understand each other's responsibilities and how they should work together to give a smooth running operation.
- What does each person do for a living? How long have they been performing that particular task for?
In addition to working on their roles, you'll want to focus on what each partner brings to the table: experience, knowledge, background etc.
The following are some activities you will want to cover in a partnership agreement:
- Ownership of partnership assets. Although there is no set length for how long anyone can own a piece of a company, there are stages of growth that should be identified. For example, if the company has been in business for one year, you'll likely want to include ownership rights on items such as: website domain names and hosting, domain name renewals, email addresses, office chairs and filing cabinets. These kinds of things often have little value when the business is ultimately sold but hold great value when another person takes over the business or after some time has passed to identify who owns these assets.
- How do you want to split the profits?
· This area is where a partnership agreement is the most effective, especially if the profits and losses increase dramatically.
Without a business agreement, partners will have to rely on their past agreements or laws in their state (if they were ever applicable) to dictate how profits and losses would be divided. This leads to confusion because one partner might be receiving profits that another doesn't feel he should be due.
- What happens if a partner leaves? Or what happens if one party sells his share of the company?
· This is an area where most people run afoul. They don't think about what will happen if someone leaves the company or even dies suddenly. In addition, they don't think about how to handle a sale or transfer of a partner's share.
Ultimately, it is the partnership agreement that will provide protection to all partners in the event they need protection.
Hope this helps clear up any confusion you might have had about what a partnership agreement is and how it should be drafted.
The above written articles are general information and not professional legal advice provided by an attorney, for specific advice on your specific needs contact an attorney licensed in your state today. ATTN: Partner Agreement Lawyer - http://www.attnpartneragreementlawyer...
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We are a family-oriented, small law firm located in Bremerton, Washington to provide compassionate and dedicated service with over 30 years experience. We handle everything from estate planning and asset management to business arrangements and family law cases. We work hard for our clients! Our Kitsap County lawyers are seasoned professionals with the experience you need to ensure that you get the best representation possible. Contact us today to schedule an appointment by calling (360) 697-1444 or visit our website at www.attnpartneragreementlawyer... (http://www.attnpartneragreementlawyer...). Our friendly and informative staff will help you through any situation that comes your way.
For more information about our family law attorneys visit our website or call (360) 697-1444 for a free initial consultation.
Attn: Partner Agreement Lawyer - Bremerton, WA - http://www.attnpartneragreementlawyer...
Estate Planning | Divorce/Custody Cases | Client Testimonials | Trusts and Wills | Tax Preparation Services www.attnpartneragreementlawyer... (http://www.attnpartneragreementlawyer...). ATTN: Partner Agreement Lawyer is a comprehensive resource for all of your legal needs.
We are a family-oriented, small law firm located in Bremerton, Washington to provide compassionate and dedicated service with over 30 years experience. We handle everything from estate planning and asset management to business arrangements and family law cases. We work hard for our clients! Our Kitsap County lawyers are seasoned professionals with the experience you need to ensure that you get the best representation possible. Contact us today to schedule an appointment by calling (360) 697-1444 or visit our website at www.attnpartneragreementlawyer... (http://www.attnpartneragreementlawyer...). Our friendly and informative staff will help you through any situation that comes your way.
For more information about our family law attorneys visit our website or call (360) 697-1444 for a free initial consultation.
Attn: Partner Agreement Lawyer - Bremerton, WA - http://www.attnpartneragreementlawyer...
Estate Planning | Divorce/Custody Cases | Client Testimonials | Trusts and Wills | Tax Preparation Services www.attnpartneragreementlawyer... (http://www.attnpartneragreementlawyer...). ATTN: Partner Agreement Lawyer is a comprehensive resource for all of your legal needs.
Conclusion
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We are a family-oriented, small law firm located in Bremerton, Washington to provide compassionate and dedicated service with over 30 years experience. We handle everything from estate planning and asset management to business arrangements and family law cases. We work hard for our clients! Our Kitsap County lawyers are seasoned professionals with the experience you need to ensure that you get the best representation possible.