Launching a business in California can be a daunting task. There may be market research to conduct, a business plan to write, funding to obtain, an appealing location to find and much more.
Many entrepreneurs decide to go into business with a partner who can complement their skills and share in both building up the business and working to keep the venture viable and prosperous. Such partners may include family members, friends, old coworkers or other acquaintances.
Disagreements are inevitable
While partnerships can begin with handshakes and smiles, there will inevitably be disputes between the partners. While most disagreements can be worked out in frank discussions between partners, some disputes can grow into acrimonious conflicts over deeply held beliefs or starkly different approaches.
Without a resolution acceptable to both partners, the partnership itself can be threatened by serious disputes.
The advantages of a partnership agreement
In order to try to avoid these kinds of existential disputes, many business owners will adopt a partnership agreement that describes the roles and responsibilities of the partners. Generally, partnerships do not require a written agreement. However, a written agreement can clarify many potential points of conflict and set the business up for success. Items covered in the agreement can include:
- Which partner has final authority over different parts of the business
- The division of profits
- Ownership and licensing of intellectual property
- Access to information about business revenue and expenditures
- Control of business funds
Because partnership agreements can serve as the cornerstone of a joint business venture and provide a means of resolving potential conflicts, it should be written with the help of an experienced business law attorney.