If you decide to start a business partnership with another person, even if the two of you are on good terms, it can be helpful to have an official contract in place. This is known as a business partnership agreement.
For one thing, the agreement helps reduce the chances of conflicts and disputes. At the same time, it can list preferred dispute resolution tactics. If you do run into conflicts in the future, simply having a partnership agreement helps show you how to move forward and find a resolution.
Ownership percentages
One key detail to address in the partnership agreement is the percentage of ownership controlled by each partner. This is important when making decisions, if one person is going to be a majority owner. It is also important when selling the business and dividing up equity.
Profits and losses
On top of that, you can define how profits should be distributed or how losses should be addressed. Similarly, the agreement can specify what types of financial contributions are expected from both partners.
Roles and responsibilities
Furthermore, you can address authority issues, roles within the business and the different responsibilities that both partners will have. Conflicts often happen because roles are not clearly defined, and one partner believes the other is overstepping the bounds of their authority. Simply by sitting down in advance and defining each role, you make these conflicts much less likely.
These are certainly not the only areas to address in a partnership agreement, but they give you a good place to start. Make sure you know what legal steps to take while drafting all applicable documentation and starting your new business.