There are many reasons why people may start a business using a partnership in New York. Each partner may bring a unique skill to the business or be able to attract unique clients and customers. It is important that each partner understands their responsibilities under the partnership to ensure the business runs smoothly.
Provisions to include in a partnership agreement
- Ownership percentages: It should be clear how much ownership interest each partner has in the partnership.
- Scope of the business: It should clearly state what type of business the partnership will engage in.
- Decision-making process: It should state how decisions regarding the business will be made and the role of each partner in that process.
- Distribution of profits and losses: It should clearly state how much of the business profits each partner receives and also how much of the liabilities each partner is responsible for.
- Resolving disputes: Disputes between partners is inevitable and a dispute resolution process is important to ensure a dispute does not end the business.
- Dissolution: If the partners decide to end the partnership, it should state how that will occur and how any assets and liabilities will be distributed between the partners. It should also state how the partners will divide clients and customers if each or one plans to continue the business
There are different ways to draft these provisions, but having an agreement on each one is important for any partnership in New York. It allows each partner to clearly understand their role in the company, which helps the partners and the overall business. A well-drafted partnership agreement may not guarantee that the business will always run smoothly, but it does make it much easier to resolve future disputes. It is important that they are clearly written though and consulting with experienced attorneys could be beneficial.