You imagine being in your business partnership for the long haul. If your personal or business relationship with your partner goes wrong, one or both of you may want the relationship to end.
To avoid litigation issues later, here are a few things to know about managing a company partnership together.
How a partnership works
Business partnerships do not require contracts or agreements. However, it is wise to have a formal document that details what percentage of the business each partner has, which responsibilities each partner has and what percentage of the profits each partner will receive.
If you do not have a contract, then you and your partner equally share in the company’s profits and losses. You also do not have a written agreement on the management of responsibilities. Your partner could end up getting you into trouble by running up debt that you are equally liable for, or you could find yourself doing all the work.
When it is time to end the partnership
Without a written agreement, all that either you or your partner has to do to end the partnership is give the other notice. Your partner could leave you high and dry, and you would have no recourse without the contract.
When you create a partnership agreement, you can define how to end the business relationship in writing. This could allow you to continue to run the business, if that is your goal, or you and your partner could agree that if either one wants out, you will dissolve the company.
Even if you and your partner are close friends, having a written partnership agreement can strengthen your personal and your business relationship. It can also help keep both of you out of the courtroom.