Many well-meaning individuals have gone into business with friends, assuming that great friends will automatically make great business partners. This is often true, but even the best of friends cannot always predict the ups and downs of business ownership. So, as you begin your venture, remember, a written partnership agreement can go a long way toward saving businesses and friendships alike.
The state of Texas recognizes any two or more individuals who team up to do business for profit as a partnership. And while you can shake your friend’s hand and start a partnership with nothing more than an oral agreement, later you may find yourself in a difficult situation when it’s your partner’s word against yours in court. Not only do written partnership agreements spell out how your business will operate, but they also can save you from default rules put in place by the state of Texas for partnerships operating without an agreement.
In general, your partnership agreement should include:
- What or how much each partner will contribute to the partnership
- How you plan to divide profits and losses
- Who will make important business decisions and how those will be handled (e.g., by vote, etc.)
- The authority of each partner, along with his or her managerial responsibilities
- What admitting new partners will look like
- How you plan to resolve arguments or disagreements
If you are unsure about how to create a solid partnership agreement, a skilled Houston business lawyer can help. I have more than 28 years of experience in business law, and have worked closely with businesses to find the most practical and positive solutions possible. Contact Patricia M. Davis, Attorney at Law today to schedule your initial consultation.