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Having a partnership has benefits and downsides: Make a contract

Business partnerships are a great idea for people who want to expand or work with others in their field. Your business partnership might be a great way to get another person onboard with your ideas. Maybe your partner has the marketing experience while you're a financial guru. Whatever the situation is, business partnerships have a chance to help you in many ways.

You and your business partner likely both feel ready to succeed, but it's important not to get ahead of yourselves. You should have a solid agreement with one another in writing, so you know what's expected of each of you when the business is in operation.

The first thing to address is how much of the business you or your partner own. Will you share the business equally? Does the percentage vary presently because one of you has put in more time or money?

Another thing to look into is adding in profit and loss allocations. Discuss how you plan to share losses or profits. Do you expect contributions, either financial or through work? This also has to be in your contract. Some people choose to leave this out of a contract, but with no clear information on what you expect, it can end up damaging your business relationship.

Finally, it's vital to understand how to handle disputes. Will you feel comfortable working out a dispute on your own? Who gets the final say? Will you work with a mediator if worse comes to worse? Make sure you have a plan, since arguments are sure to happen at one point or another.

No matter what you do, you need to have a solid contract when you plan to work with a partner. Your attorney can help you draft a fair contract.

Source: HuffPost, "7 Things Every Business Partnership Agreement Needs to Address," Kc Agu, accessed Feb. 19, 2018

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