A partnership agreement is arguably the most important document you will create when going into business with a colleague. Without a formal, well-drafted agreement, you are leaving your business and your personal assets vulnerable to disputes.
What Does a Good Partnership Agreement Do?
It clearly defines the rules of the partnership, addressing potential issues before they become problems. A robust agreement should cover:
- Financial Contributions: How much capital each partner is contributing and how profits and losses will be shared.
- Roles & Responsibilities: Clearly outlining each partner’s duties and decision-making powers.
- Dispute Resolution: A step-by-step process for resolving disagreements.
- Leaving the Partnership: What happens if a partner wants to retire, resign, or is unable to work? It should include provisions for a partner’s share to be bought out.
- Restrictive Covenants: These clauses prevent a departing partner from setting up a competing practice nearby, protecting your goodwill.
- Death or Illness: Provisions for what happens if a partner becomes seriously ill or passes away.
By addressing these issues upfront, a partnership agreement acts as a safeguard for your business and a foundation for a healthy working relationship. Don’t rely on trust alone. A professional, detailed agreement protects all partners and ensures the long-term stability of the practice.
Talk to the experienced team at Jacobs Legal to draft a partnership agreement that protects your interests and your practice’s future.