A partnership is formed when two or more people agree to carry on a business, sharing profits and losses. If you decide to form a partnership, you have the option of choosing to create a General Partnership, Limited Partnership or Limited Liability Partnership. General Partnerships require no formal formation processes while Limited Partnerships and Limited Liability Partnerships require the filing of paperwork with the secretary of state. Thus, you will want to take these factors and other into consideration when forming a partnership.
What Is a Partnership Agreement?
A partnership agreement is a contract that outlines:
- The day-to-day operation of the partnership business;
- The duties, rights, and authority of each partner;
- How the partnership is affected by the death of a partner(s);
- How the partnership assets and business will be handled upon dissolution of the partnership;
The primary role of a partnership agreement is to ensure that each partner has a clear understanding of his/her responsibilities and obligations to the partnership.
While you can find template/form partnership agreements online, it is important to realize that each partnership is unique and is often not properly represented by a standard one-size-fits-all form agreement. By consult with the experienced business law attorneys at Calabrese Law Associates you can be sure that you will have a partnership agreement that is prepared specifically for your partnership business, which will protect your legal interests and your business.
The Pros and Cons of Partnerships
Some benefits of the “partnership” business structure include:
- Ability to structure your business to protect some of your personal assets;
- Opportunities for fundraising become easier with a formal structure involving multiple owners;
- Ease of establishment and fewer regulations when compared with other business structures;
- Generally, partners have the power to mange the business operations.
Like all business structures, partnerships can also have some disadvantages. General Partnership disadvantages include:
- Possibility of the partnership dissolving if one partner passes away or wants to leave;
- Individual responsibility of each partner for the liabilities of the partnership and joint and liability for the partnership’s actions.
Some disadvantages of a Limited Partnership are:
- General partners are responsible for the liabilities of the partnership;
- Failure to file the proper documents with the secretary of state will cause the partnership to be a General partnership.
In a partnership, there must also be cooperation and consensus on how to run the business. Thus, to maximize the advantages of the partnership while reducing some of the drawbacks, a well-written partnership agreement is needed.
A partnership agreement designed for your specific needs and your unique partnership will help you address possible points of contention, prevent disagreement, limit your liability and likelihood of issues down the road. Working with a partnership agreement attorney in Boston, such as the attorneys at Calabrese Law Associates, ensures your partnership is being governed by the right contractual terms. Working with a business attorney from Calabrese Law Associates also ensures the partnership agreement is valid and correct, which reduces the chances of legal issues later.
If you are signing a partnership agreement, you are likely thinking about starting a business, or joining an existing business that is now becoming a partnership. However, are you thinking about what will happen when something goes wrong? It might be on your mind for the initial phases of opening your business, but what about down the road? An experienced attorney at Calabrese Law Associates understands the issues that might affect partnerships, and can suggest what you need to address and prevent disputes in the future – the first step is always to have a properly written partnership agreement.
Having a correctly prepared partnership agreement in place as soon as possible is crucial to ensuring your business is successful. In addition, you can work dispute resolution processes into the partnership contract so if a problem arises, you can solve it with less legal intervention and costs.
When Should You See a Partnership Attorney At the Boston Offices of Calabrese Law Associates?
There are many situations in which you will want to consult with our experienced business lawyers. For instance, if:
- You are opening a new business
- You have merged or acquired a new business and will now operate as a partnership
- You run a family company and now want some family members to run your company alongside you
- There is a dispute involving a current partnership
- You have a partnership and want to grow it properly
- Your partner in business has passed away or has left the company and you need advice
What Should You Discuss?
There are a few issues you will want to discuss with your attorney at Calabrese Law Associates. For example, your agreement should outline capital contribution of each partner as well as any decision-making powers. If one partner is a silent partner, for instance, you will want to include that in the contract. You will also want to clearly outline distributions and salaries. How much will each partner make and when? Will the money be kept in the company for some time while the business is growing?
An experienced partnership contract attorney at Calabrese Law Associates can address these issues and recommend other clauses, based on the specifics of your situation.
If you would like to speak with a partnership attorney in Boston, contact the experienced team at Calabrese Law Associates.