All business partners in Ohio run the risk of not getting along at some point. However, when family is involved in a business, the risk sometimes climbs higher. Mixing family with business means that people know each other’s deepest secrets and oldest wounds, making it easy to add fuel to the fire when things are at their worst.
According to the American Bar Association, family disputes often arise when the family members running the business have values that overlap but do not align. This may range from how to market the business, who to market to or whether or not to accept an offer to sell. One of the most serious reasons for disputes in a family business is the issue of succession. Family members often feel that whoever was chosen is a favorite.
There are other times when the disputes are external. Suppliers or longtime customers may take issue with the way the company operates or a specific incident. Because of this, families need to protect their business against the threat of external litigation as well.
NerdWallet recommends creating limited liability partnerships to accomplish this. In this setup, each partner remains personally responsible and liable for their specific professional contributions to the business. As businesses add new partners to the mix, even when they are family members, it is important to create and update the partnership agreement.
Another benefit of an LLP is the possibility of growth for ambitious workers in a small business. In most other types of small businesses, workers can aspire no further than manager or supervisor. However, in an LLP, they may one day become a partner. This helps companies to retain the brightest minds that would have otherwise become competitors in the next few years.