If you're thinking about starting a business with one or more other people, then a Business Partnership Agreement is likely the right business structure for you.
Here's what you need to know before you get started with your Business Partnership.
What is a Business Partnership Agreement?
A Business Partnership Agreement is a binding document which formalises the rights and obligations of two or more people who are going into business together as partners.
Business Partnerships are a type of business structure which allows partners to share business responsibilities and decision making authority as well the profits, assets, liabilities and debts of the business.
What is included in a Business Partnership Agreement?
The document itself includes a range of important information about the how the business will be run. This includes:
- The roles and responsibilities of each partner
- The authority of each partner to make binding decisions for the business
- The amount of capital invested by each partner
- How profits and liabilities will be divided between partners
- Provisions for dispute resolution
- Details of how partners are to be added or removed from the partnership
Business Partnership Agreements can vary from being fairly simple to extremely complex depending on the number of partners and the nature of the business.
It's essential that you have a lawyer write the Partnership Agreement to ensure that all the important details are covered, and there are no mistakes.
Why do you need a Business Partnership Agreement?
Setting up a business as a partnership is a very popular option for family businesses and friends starting a business together.
Because of this, people often don't think they need a written Partnership Agreement since they trust their friends and family. However, without a written Agreement, you run the risk that business disagreements will damage your personal relationships.
A written Business Partnership Agreement will ensure that each partner knows their rights and responsibilities. It will also set up policies for resolving disputes.
Business structure advice
There are a few different business structures as well as Business Partnerships. The most appropriate one for you business will depend on your circumstances. The three most common business structures are:
- Business Partnerships
- Sole Traders
Many people starting a small business will set up a Business Partnership or as a Sole Trader. The biggest difference is that a Sole Trader is solely responsible for the decision making in the business while a Business Partnership will involve collaboration for decision making.
Get expert legal advice
At Rose Lawyers, we have extensive knowledge of business law and experience helping business owners with the legal needs. We can help you through the process of setting up a Business Partnership.
For more advice on starting your business, call Rose Lawyers on 03 9878 5222.