Business Partnership Agreement

Discussion in 'Growing and Managing a Business' started by rskern, Jun 11, 2010.

  1. rskern

    rskern
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    It was a suggestion for me to create a Business Partnership Agreement before I create a new company (LLC) name if I was to start a new company with a partnership. Can someone tell be what a Business Partnership Agreement will do for me and what are the advantages?
    Thanks.
     
  2. bizadvisor

    bizadvisor
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    You have to make sure everything is clear in your partnership. So you put things on the table before doing any other thing happen, in this way, you may avoid further problems.
     
  3. ArcSine

    ArcSine
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    If you form an LLC, the document is generally called an Operating Agreement, and it serves the same function for an LLC as a Partnership Agreement does for a partnership (and, BTW, a Shareholders' Agreement, and/or Bylaws, for a corporation).

    In all cases, its purpose is to carefully define each party's rights and responsibilities. Your OA will clearly specify how profits, losses, and cash flow are to be divided among the members. It will (if it's intelligently drafted) spell out precisely what procedures are to be followed in the event that a partner wants out; a new partner wants in; a partner wants to sell his or her interest to another partner; etc.

    A good move on your part at this stage is to read two or three OAs (you can find copies on the 'net...just Google "operating agreement") and you'll get a much better idea of the kinds of issues that an OA covers. You'll see that basically, a good OA anticipates most of the questions that partners might have down the road, and gets everyone to agree beforehand on the answers, before they start down that road.

    Best of luck with your new venture!
     
  4. scifi

    scifi
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    Well I would suggest you to go for LLP- Limited Liability Partnership Agreement...It is the best business partnership agreement seeing the increase in cases of dispute between partners these days...It will save you tomorrow from unnecessary disputes...:)
     
  5. Fergal

    Fergal
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    Welcome to Business Advice Forum rskern, thanks for joining and posting your business question.

    When you say that you want a partnership agreement, are you seeking to legally register your business or do you want to form an agreement between yourself and other partners in the business?
     

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