Knoxville Partnership Agreement Attorney
Partnerships are one of the easiest business entities to form in Tennessee, requiring little more than a handshake between two people. However, partnerships carry extreme legal risks. Partners can bind each other to contracts, and disputes often arise when one partner wants to leave. The helpful news is that you can avoid many problems with a well-crafted agreement between the partners. Before creating a partnership, contact Atkins Brezina, PLLC, to discuss creation of an air-tight legal document with our Knoxville partnership agreement attorney.
What is a Partnership Agreement? Do You Need One?
A solid partnership agreement should identify the responsibilities of each partner and other key details:
- Basic information about your company: You should include at least your business name and a description of your business.
- Partnership type: There are many types of partnerships, including General Partnerships, Limited Partnerships, and Limited Liability Partnerships. You should spell out which type of partnership you will be in this document.
- Ownership: Identify each owner and how much of the business each partner owns. Some partnerships are owned equally by all, while others have unequal ownership shares.
- How are decisions made: Should every decision be unanimous? Can only one partner make certain decisions on routine matters?
- Profits: Lay out how the company will allocate profits between the partners.
- Succession: Identify what happens when one partner dies. Do the remaining partners have a right to buy their share of the partnership? Will a new owner who inherits the share (like a family member) have the same powers as the deceased?
- Buyout: Some partners might want to leave at some point. Spell out whether they can sell their share to outsiders or if the partners will buy it. Also discuss valuation.
- No one wants to think about a business ending, but you should include a section explaining how you’ll liquidate the partnership when the time comes.
These are some of the basic building blocks of a partnership agreement. Without one, your partnership could flounder, especially if a founder dies and their child inherits the share in the company. They might have no capacity to participate meaningfully in your business. The last thing you need is to end up in court litigating a partnership dispute which might imperil the future of your business.
A partnership comes with risks. In particular, one partner might bind the partnership to expensive and/or unfavorable contracts. The default partnership is a general partnership, where partners have liability for any debts, but that might not work for you. Discuss your goals and concerns with a member of our legal team.
Get Your Partnership Off the Ground and Running
Atkins Brezina has developed close relationships with members of the Knoxville business community and realizes that every business has its own culture. You need a partnership agreement that fits your company. Avoid using a partnership agreement you found on the internet, as it might not even be effective in Tennessee. Instead, contact our law firm today to be put in contact with a Knoxville partnership agreement attorney.