Do I Need a Lawyer When Forming a Business Partnership?
Forming a business partnership can be a simple process. A partnership is simply an agreement between two or more persons to operate a business for profit. The agreement is not required to be in writing to be enforceable, however, not having a partnership agreement in writing can lead to complications and legal issues when there is a dispute among partners. It is in your best interest to consult with a business law attorney when forming a business partnership in order to ensure your rights and interests are protected. Below are some aspects you should consider when forming a business partnership.
Management and Control
When forming a business partnership you definitely want to consider the extent to which any one partner has management and control over the business. For example, if the business is to enter into a contract, does one partner have the authority to bind the partnership to the obligation or does it require all partners to assent to a contract. It is a good idea to define each partner’s role clearly.
Assets and Liabilities of the Partnership
Forming a business partnership generally requires that the partners contribute assets to start the business. Other times, the business may encounter difficulties where it requires a partner or partners to loan or fund the business with their personal assets. It is good business practice to document what each partner is investing into the business and the terms of any repayment from business profit.
Dissolution of the Partnership
Generally, when individuals begin forming a business partnership they do not give much thought to what plan would be followed upon a dissolution of the partnership. Depending on the nature and causes of a dissolution, it may not be easy to agree upon certain aspects of a dissolution such as the division of debt and assets. When forming a partnership it is prudent to address a dissolution of the partnership so that each partner’s rights and responsibilities are clearly established.
Consult a Business Law Attorney
Although forming a business partnership can be a simple process, it is wise to have a comprehensive written partnership agreement that defines the responsibilities and rights of the partners. Without a written partnership agreement in place, the default laws pertaining to partnerships may be applied in legal disputes which may not be favorable. If you are considering forming a business partnership, consult with a knowledgeable business law attorney.