When you and your business partner decide to establish a legal business entity, you may have high hopes and strong projections for the success of your partnership. Yet you may hear recommendations to establish an ironclad, legally binding partnership agreement when you file your business partnership in Ohio. But why would you need a partnership agreement?
In short, circumstances change. Your relationship with your business partner may go sour, or circumstances outside your control may force one or both of you to pull back from the business. You may disagree about the direction the business should go in, or the market may shift unexpectedly. As the U.S. Small Business Administration says, when there is any form of conflict in your partnership, having a partnership agreement can define the framework that helps resolve disagreements to the satisfaction of all parties involved. It can also maintain transparency and accountability when there is disagreement on how a situation can be handled.
Partnership agreements can also be instrumental in facilitating the dissolution of a partnership without disputes over ownership, shares, assets, settlements or other factors involved in terminating a business partnership. A clear partnership agreement contains terms defining who is accountable, liable or owed in the event of eventual dissolution. While you may have high hopes for a long and successful partnership, practical business ownership means covering all contingencies with an agreement that discusses and agrees upon potential courses of action.
This has been a reference post meant only for educational purposes, and should not be misconstrued as legal advice.