Can I write my own partnership agreement?
Why Is a Partnership Agreement Essential?
It is recommended that you obtain an attorney to assist in drafting a partnership agreement. A partnership agreement is vital as it typically serves as the sole framework for managing the partnership. Unlike corporations or limited liability companies, which operate under articles of incorporation or organization, you and your partners will depend on your own formation document.
Establishing Rules for Your Business
A partnership agreement empowers you to set the rules for your enterprise. In the absence of a written agreement, your state's laws will govern many aspects of your business. By creating your own agreement, you can negotiate and decide what is most suitable for your partnership. State laws are not tailored to specific businesses, and lawmakers may not understand the nuances of partner relationships. You and your fellow business owners have a better grasp of what works best for your situation. With a partnership agreement, you can define policies that serve everyone's interests.
Resolving Partner Disputes
A partnership agreement can effectively address disputes among partners. Without a written agreement outlining your rights and responsibilities, it becomes challenging to resolve conflicts when they arise. Minor misunderstandings can escalate into significant disagreements. A partnership agreement can set clear expectations and provide predefined solutions or at least a pathway to resolve issues.
Ensuring Consistency and Stability
Partnerships lacking an agreement usually handle problems as they come, leading to inconsistent decision-making and outcomes. For instance, if one partner is ambitious yet easily bored, they may enthusiastically pursue a social media marketing campaign one year but abandon it before fully developing your company's online presence. Having a partnership agreement that delineates partner responsibilities can help prevent any lapses in follow-through from individual partners. Ultimately, decision-making is governed by the agreement rather than any single partner at any given time.
Providing Structure for Changes
A partnership agreement offers structure when partners join or leave. Establishing partnership rules from the outset allows your business to adapt and grow. Since partnerships heavily rely on their partners, the departure of one or the addition of another can disrupt the business or even terminate the partnership. However, with a partnership agreement in place, new partners will have a clear blueprint for operating the business. Additionally, you'll already have a documented process for continuing operations without one of the partners. Our office can effectively address any legal questions about partnerships. If you have any questions, please fill out the following form below and a Business Lawyer from our office will get back to you.
