Business Planning 101: Forming a Partnership or Joint Venture

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The Articles of Partnership is a voluntary contract between two or among more than two persons to place their capital, labor, and skills, and corporation in business with the understanding that there will be a sharing of the profits and losses between/among partners. Outside of North America, it is normally referred to simply as a partnership agreement.  Many companies and entrepreneurs form LLCs or Corporations prematurely without realizing the tax burdens, false liability protection and other factors that many times makes it inefficient to form a company rather than a partnership (especially in early start-ups or pre-revenue ventures).  Partnerships Agreements or An Articles of Partnership Agreement can cover the basics without the burdensome caveats of other legal entities.

Put the terms of your partnership in writing to protect your business. If you and your partners don't spell out your rights and responsibilities in a written partnership agreement, you'll be ill-equipped to settle conflicts when they arise, and minor misunderstandings may erupt into full-blown disputes. In addition, without a written agreement saying otherwise, your state's laws will control many aspects of your business.

How a Partnership Agreement Helps Your Business. A partnership agreement allows you to structure your relationship with your partners in a way that suits your business. You and your partners can establish the shares of profits (or losses) each partner will take, the responsibilities of each partner, what will happen to the business if a partner leaves, and other important guidelines.
Hire A Professional. What to include in your Partnership Agreement is subject to the particular partnership the two (or more) parties have in mind.  A list of the major areas that most partnership agreements cover. You and your partners-to-be should consider these issues before you put the terms in writing: (1)Name of the partnership, (2)Contributions to the partnership, (3)Allocation of profits and losses and draws, (4)Partners' authority, (5)Partnership decision making,  (6)Management duties, (7)Admitting new partners, (8)Withdrawal or death of a partner and (9)Resolving disputes. If you are ready to draft your partnership agreement, hire Nicholas Coriano and your Partnership Agreement can be written in as little as 5 business days or less.  Email today to start talking shop by clicking here.