Starting a Partnership? Choose Your Business Partner Carefully
In an efficient business partnership, the partners complement each other’s strengths and compensate for each other’s weaknesses. Together, the partners are able to accomplish more than they could alone. This is the type of partnership that every entrepreneur hopes for. However, quality partnerships like these do not happen by chance. If you are thinking of forming a partnership, it is up to you to research your options, vet potential partners, and avoid key mistakes that could increase the chances of a dispute. Most importantly, work with an experienced business law attorney.
Vet Potential Partners Thoroughly
When starting any business relationship, it is important to avoid naivety. Research potential partners and encourage potential partners to do the same for you. It is important to remember that the way people act around their friends is not necessarily indicative of how they will act in a business setting. Do an Internet search on your potential partner for past bankruptcies or lawsuits filed against him or her and contact his or her references. It may also be in your best interests to hire a professional firm to conduct a criminal background check.
Ideally, you should be looking for a partner who brings something unique to the business and has a similar communication style as you. Most importantly, your partner should be someone who will be as committed to the business’s success as you are.
Never Rely on Handshake Agreements
You may be thinking of going into business with someone you have known for years. Perhaps your intended partner is even a close friend or family member. Regardless of how much you trust your potential partner, handshake agreements put you and your partner at unnecessary risk. Work with an attorney to create a robust partnership agreement. Describe how you plan to share ownership, split profits, allocate day-to-day responsibilities, and handle any disputes that arise. Include buy-sell agreements that address what happens if a partner exits the partnership or passes away. It may also be a good idea to include limits on the amounts that partners can withdraw from company accounts.
Contact a Stamford, CT Business Partnership Attorney
Entering into a business partnership without the proper legal support can be disastrous. A Fairfield County business lawyer from the Law Offices of Peter V. Lathouris, LLC can help you choose the correct business structure for your needs, draft partnership agreements and other business contracts, implement important legal protections, and much more. If you do encounter a business dispute, our team can help you resolve the dispute and ensure that your rights are protected. Call us today to schedule a free, confidential consultation.