How to wisely form a business partnership

Business partnerships can start out as seeming to be a beneficial arrangement but often times the end result is less than ideal.Obviously there is much to consider when establishing a business partnership.Perhaps the biggest consideration is choosing your business partner.You must choose your business partner wisely because his actions will not only reflect on your professional character but they will also largely determine the fate of the business.

After you have chosen a business partner and have worked out between the two of you what roles you will play in the business the next step is to seek legal council to make it all official.Legal assistance in forming business partnerships is one of the wisest things that you can do.Licensed professionals who are familiar with partnership agreements can help you decide which agreement is appropriate for your situation.

Getting started
Most partnership agreements are considered to be either standard or professional.A standard partnership agreement is typically shorter than a professional agreement (typically 5 pages or less).The standard partnership agreement is for those who are just interested in obtaining general partnership agreement.Usually the language is simple and the instructions are easy.The standard partnership agreement is basically just a way to get your partnership documented for in case of any future disputes.The professional partnership agreement is typically longer in length that the standard version and is drafted by an attorney.Usually 15 or so pages in length the professional partnership agreement contains more detail and is more comprehensive in content.A professional partnership agreement is a very good idea for partnerships because responsibilities, rights, privileges, ownership, investments, etc. are clearly delineated.Both parties can feel secure about having individual rights in the case that the partnership dissolves.

Add a new partner or buy one out
From time to time the wise decision when working in a partnership will be to add a new partner or to buy out an existing one.Obviously the same legal warnings and advice will exist when adding a new partner as when starting the initial partnership.In the case where a partner is to be bought out, mutual agreement to the decision is ideal.If mediation is needed, legal assistance can be provided to assure that both partner's best interests are considered and a mutually beneficial solution can be met.

Never out rule dissolution as a possibility
No one wants to think of partnership dissolution when they are forming a partnership but everyone should.The majority of businesses that begin as a partnership will eventually dissolve.Dissolution is not necessarily something to fear.Dissolution can be very positive and mutually beneficial.In many cases a partnership dissolves simply because the partners develop different interests and need a change.As you form a business partnership, make sure that you are clear about the ownership rights of each partner so that there is little debate or argument if a dissolution occurs.

Common partnership agreement topics
Whether you deem it wise to seek legal assistance in forming a business partnership or not, you should carefully consider the possibility that serious issues will come up at one time or another in your business partnership.Plan ahead for these bumps in the road by having a plan as to how you will handle the following common partnership agreement topics:

- Ownership interest
- Loans by partners
- Allocation of profits
- Management
- Duties of partners
- Salaries and compensation
- Borrowing money
- Reimbursement
- Competition
- Authority
- Power of attorney
- Admission of new partners
- Meetings
- Termination and more!