Business partners in Denver often share the same passion for their jointly-owned enterprise, but it is still important to ensure that they have the same expectations about their respective roles in the business and a set of rules on how their business should be run. Therefore, they may want to execute a partnership agreement as part of the business formation process. Not only could such an agreement resolve disputes before they occur, but without one the business may be governed by state law.
There are a number of items one might want to include in a partnership agreement. The agreement should include the name of the partnership. Sometimes the business is named after the partners, while other times the partners decide to use a fictitious name. If so, they should make sure that name is not currently being used by another business.
A partnership agreement should also include the respective contributions each partner will make towards the business. A business will have both profits and losses, and a partnership agreement should delineate how these will be allocated between the partners. Each partner's authority to make binding business decisions should also be included in a partnership agreement. A partnership agreement can also lay out how important business decisions will be made.
A general overview of each partner's management duties can be included in a partnership agreement. Whether and how to bring new partners into the business can also be outlined in the partnership agreement. Sometimes a partner dies, suffers a disability or decides to leave the partnership. A partnership agreement can include buyout provisions that address just such a situation. Finally, a partnership agreement can set out a dispute resolution process that will avoid the need to go to court to resolve every dispute.
Just as every partnership is different, each partnership agreement will need to be uniquely tailored to fit the needs of the business and those who own it. A partnership agreement is a good way to ensure partners view their enterprise the same from the get-go. Running the business may be made smoother. And, should a partner exit the business, or should there be a dispute between partners, there will be a plan in place for handling these situations in a productive manner.