Why you should have a written partnership agreement
Having a strong relationship with your partners is extremely important, but sometimes it isn’t enough. Having a document which covers all aspects of running the business, both those which are liable to disputes and those which are not is essential.
If you haven’t done so already, the following are some reasons why you should create a written agreement now:
- You and your business partners have a clear understanding of the rules and regulations which will apply to the business and to your business relationship.
- If there is no agreement in place, then all the partners share equal profits and cover losses equally. This will be regardless of how much time and effort each partner contributes to the business. Creating an agreement will allow partners to tweak these aspects and create a unique division which represents the partner contributions more accurately.
- If there is no agreement in place, then the terms of the partnership will be covered by the legislation of your state or territory. These have a one-size-fits-all approach which might not suit your business. Creating an agreement specific to your partnerships will mean it is tailored to the specific circumstances and relationships within your business.
- Minor disagreements can lead to bigger problems if there is no set method to resolve them. A written agreement will allow you to create clear and unambiguous procedures to deal with those sorts of matters and allocate roles to each partner so that there are no confusions about decisions-making.
- Creating an agreement will allow you to focus on the business end of things as opposed to spending time on dealing with specifics of the partnerships.
A written partnership will help streamline the nitpicky processes so that you can focus on the growth of the business.