A Business Partner Agreement is the key to peace of mind. A business partnership agreement sets forth the obligations and responsibilities of both partners in a clear and concise manner, which can help avoid future disagreements or misunderstandings. It also provides for what happens if a partner dies or becomes incapacitated.
Set The Ground Rules
In your business partner agreement, you should lay out the ground rules for how you’ll work together. This includes things like how much time each partner will spend on their tasks and what happens if one partner wants to leave the company. You should also establish how profits will be split between the two of you–and whether or not there are any circumstances where one party could take a larger share of profits than another (for example, if they contributed more money). Finally, make sure that every aspect of running this new venture has been covered by including clauses about splitting costs related to creating or marketing your product or service.
A Business Partner Agreement should clearly define the responsibilities of each partner, including:
- The division of labor. What are you going to do? Who’s going to do what? This is an important aspect of a partnership, because it helps ensure that all parties know what they’re getting into, and can prepare accordingly.
- Profit sharing. How will profits be divided? Will it be on an equal basis, or will one party receive more than another depending on their contribution (or perhaps even luck)? It’s best to decide this early on so there aren’t any surprises later on down the line!
- Liability protection. Partnerships are not limited liability companies (LLCs) because LLCs must register with state authorities before becoming operational; however, there are ways for partners in a general partnership share risk without forming an LLC or corporation.
- Equipment ownership & property rights: Should equipment belong entirely with one partner, or should both own some portion of it? Should property rights also extend beyond just physical items such as tools but include intellectual property like designs created during construction projects together.
- Files & records management policy
Be Fair and Equitable To Both Partners
Be clear about what each partner is expected to do. Make sure everyone understands their responsibilities, including financial obligations, time commitments and decision-making authority. Don’t make one partner do more work than the other because it could lead to resentment or conflict later on in your relationship (and certainly won’t make either party want to stick around).
Create A Plan For The Future
When you’re creating your Business Partner Agreement, it’s important to consider the future of your company. What will happen if one partner leaves or dies? What if both partners want out? You’ll want to make sure that every aspect of your partnership has been accounted for so that there are no questions when these situations arise.
Consider Estate Planning And Insurance Needs
Consider your business partner’s estate planning needs. If you have a business partner, take the time to talk about the details of their estate plan and how it may affect your business relationship. It’s not uncommon for people to make changes in their wills as they get older or if they have children who are grown up and starting families of their own.
Consider disability insurance for your partner and family members. If your partner is unable to work due to illness or injury, this could cause financial hardship for everyone involved–especially if there is no other source of income coming in from another job or retirement savings account (if applicable). Consider purchasing disability insurance for both yourself as well as any other family members who would be impacted by losing one parent’s income stream; even something like paying off student loans can help relieve some stress during difficult times!
A Business Partner Agreement is a promise to work together and make your business successful. It’s saying that you have faith in the partnership, and that your partner has what it takes to do the job well. The BPA should reflect this commitment by being thorough, detailed, and comprehensive–but not overwhelming or complicated.
As you work on your business partner agreement, keep in mind that it’s not just a legal document. It’s also an opportunity to build trust between you and your partner. By being transparent about your goals and responsibilities, you can create a foundation for success in your new venture together.