Starting a New Business or Partnership – What About your Shareholder or Partnership Agreement?
When forming a new business and partnership there is (or at least should) be significant excitement and dedication focused on the establishment of your business. Many times this excitement and hard work leads partners to overlook and neglect the requirement of establishing a clear and concise "partnership agreement" or‚ if applicable‚ shareholder agreement. When things are going well the fact that you did not establish a precisely drafted partnership / shareholder agreement will‚ more likely than not‚ be unnoticed and of little consequence. However‚ as your business matures the nature of your "partnership relationship may also change and the potential for dispute may arise. While partnership disputes cannot be avoided‚ the existence of a clearly drafted partnership agreement will serve to minimize the potential that your "partnership dispute" may lead to costly and time consuming litigation. So what do you need to when starting a New York or New Jersey partnership? "lay out the ground rules in a concisely drafted partnership agreement prepared by an attorney who understands New York and New Jersey partnership laws". Also dont waste you time with generic forms or boilerplate agreements – more often than not these "generic" and poorly drafted agreements lead to more litigation than having no agreement at all.
Factors to Consider
Well‚ some factors that you should consider and discuss with your business lawyer‚ include:
- The nature and purpose of the partnership;
- Authority of each partner involved in the partnership;
- Profit and loss allocation;
- Capital contributions of each partner;
- Work responsibilities and obligations;
- How to resolve a partnership conflict;
- How partnership disputes should be handled;
- Rights or ristrictions respecting the sale of a partner or shareholder inerest;
- How to admit new partners into the partnership;
- What to do in the event that a partner dies; and
- Bank account authority in the partnership
There are other factors to consider but the key (or at least the first step) is to recognize the significance of having a partnership / shareholder agreement prepared and to start the discussion about your business and what needs to be included in your agreement. The right lawyer will have the "questions"‚ you will need to think about the "answers".
Contact Business and Partnership lawyer Charles N. Internicola at 800. 976. 4904 or by email to learn more about your options and the best way to structure a partnership agreement for your business.