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What should be stated in partnership agreements?

On Behalf of | Feb 17, 2021 | Business Law |

There many different businesses in Stanton Island that provide many different products and services for people and other businesses. These businesses vary in size as well. Some employ many people while others are run by just one person. Depending on the type of business it is and its size, the owners need to choose a business structure that makes the most sense for their business.

There are many different options they can use. There are corporations, S corporations, limited liability companies, sole proprietorships and partnerships. There are many factors that go into choosing a business structure, but one that is common for businesses run by two people or a small number of people is a partnership. This means generally that the people running the business will own it and share in the profits and losses of the business.

Important aspects of partnership agreement

As partners in a partnership share in the expenses, losses, profits and also share in the responsibilities of running the business. It is important that there is a good partnership agreement when the business starts. It is important that the following issues are addressed in the agreement:

  • Contributions and distributions – the agreement should clearly state how much each partner is contributing to the partnership as well as how much each partner will receive from the profits.
  • Ownership – the percentage of the ownership each partner has in the business.
  • Decision making and dispute resolution – it should state how decisions will be made and how differences in opinion will be resolved.
  • Major changes and dissolution – the agreement should state what happens if a partner gets sick, wants to retire or how the partnership will be dissolved.

Having a partnership in New York City can be a very good business arrangement, but it is important that the partnership agreement is well written and important aspects are agreed to at the outset of the partnership. This will hopefully diminish future disputes that may arise between the partners. Experienced attorneys understand the various aspects of partnerships and may be able help draft partnership agreements.