Six Things To Consider Before Forming A Business Partnership
Forming a business partnership is a very exciting time, but it is not something that should rush into. Before making the partnership official, there are many things to consider. Below, our Knoxville business and commercial law attorney outlines six of the most important considerations before forming a partnership.
Make Sure Your Values are Aligned
You and your business partner do not have to agree on everything, and there is little chance that you will always be in agreement with each other. However, you should make sure that you and your partner share the same short-term and long-term goals and values. If you do not share the same values, it may result in many disagreements, and too many will hurt your business in the end.
Outline Clear Expectations from the Beginning
Running a business requires a great deal of work. To ensure everything proceeds smoothly, you must clearly outline the roles and responsibilities of each party from the very beginning. Creating a job description for each partner can be helpful when defining expectations. Also outline what each party will contribute in terms of money, responsibility, and time.
Determine How Business Finances Will Be Handled
The goal of any business is to make a profit and so, it is critical that you and your partner understand how the business finances will be handled. Consider whether either or both partners will contribute personal income towards growing the business, and how comfortable each party is incurring debt. Discuss how the business finances will be managed going forward, and whether the partners will accept a salary or focusing on reinvesting in the company.
Determine the Type of Partnership
You will have to determine what type of legal business structure you will set up. You can choose a general partnership, a limited liability partnership, or a limited partnership. You should speak to a Knoxville business and commercial law attorney who can outline the benefits and drawbacks of each and advise on which structure is best for your situation.
Create an Exit Strategy
You likely do not want to think about the possibility of closing your business or withdrawing from the partnership before your company has even really gotten off the ground, but it is important you do. Having a clear exit strategy in place can help you resolve different issues such as how the proceeds of a sale will be divided and how a partner will be compensated for their time and resources if they leave the company. Emotions often run high when one or both partners want out of the business and so, having a plan in place makes it much easier.
Speak to a Business and Commercial Law Attorney in Knoxville
Every good partnership needs an official agreement, and a Knoxville business and commercial law attorney can help you draft one. At Brezina Law, PLLC, our experienced attorney can help you draft an agreement that will be agreeable to all parties. Call us now at 865-500-3121 or connect with us online to schedule a free consultation and to learn more.