Minnesota Partnership Law
If youre considering starting a new business, you might be thinking about forming the business as a partnership. Partnerships are fairly easy to establish and have many benefits for the members of the partnership. Though this may be a good business entity for you, there are challenges that you must keep in mind while moving forward, chief among them, the partnership agreement. To learn more about the most important issues that need to be dealt with in a partnership agreement, keep reading.
First, you need to be sure that the partnership agreement lays out what each partner brings to the business and what if any contributions will be made going forward. This can include more than just money, explaining what will be expected of partners in terms of effort and time commitments. Related to this is explaining how distributions will be divided. How will any profits be split between the members? Who gets paid first if there is not enough money to go around? If salaries will be paid, you will need to clarify that as well.
Another crucial issue to resolve in the partnership agreement is ownership. What share of the business does each member own and what happens if someone wants to sell? Will you buy out the other side, or allow a sale of the partnership to an outsider? What if you decide to take on new partners? Youll need to think through what happens in the event of retirement, death or bankruptcy. Additionally, you need to think through questions of dissolution. Though no one wants to go into a new partnership imagining the worst, it is crucial that you do so. What steps will need to be taken to end your partnership? Be sure and consult with an experienced Minnesota small business attorney as state law can have a big impact on this process.
Two other important and related points that need to be tackled in any good partnership agreement are decision making and dispute resolution. What happens if you and your partner dont agree? Even close friends or family members will experience this at some point and you need to know in advance how these impasses will be resolved. If there are two partners and no tiebreaker it is especially crucial to understand how to avoid a stalemate, something that can not only harm a relationship, but also cripple a business. Think about whether mediation will be required as this can avoid having to take otherwise minor disagreements to court.
Estate Planning and Business Lawyers
Its good to know that with the right help, establishing a Minnesota small business does not have to be a scary proposition. An experiencedMinnesota small business attorneycan help walk you through the process of setting up your new company and ensure it offers the maximum benefits for your individual situation. For more information, contactJoseph M. FlandersofFlanders Law Firmat (612) 424-0398.
Source: https://www.forbes.com/sites/allbusiness/2016/10/08/7-things-every-partnership-agreement-needs-to-address/
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