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Even when you trust your partner, you still need a partnership agreement

On Behalf of | Apr 8, 2021 | Business Law |

New business partners sometimes decide not to create a partnership agreement because they each feel like bringing up the whole idea may make the other person think that there is a lack of trust between them. They don’t want to start the company with that perception, so they skip this step. 

The reality, though, is that there are many reasons why partners who trust each other still need a written partnership agreement. If you and your partner discuss it thoroughly, it does not have to hinder your relationship in the least. 

Reasons to create a written partnership agreement

The biggest reason to create the agreement is that it can actually help you avoid a dispute in the future. Yes, you trust each other, and that may never change, but disputes happen. One person wants to take the company in a specific direction; the other doesn’t. Who gets to make that call? The agreement can lay out the decision-making process. That can ultimately spare your company a lot of problems.

You can also just define the terms of your agreement to make sure that you are both actually thinking about the business in the same way. Maybe you assumed that the two of you are starting the company as 50/50 partners. The other person, however, believed it was their company and you were just coming on as a high-level employee. Now, either tactic can work, but it is critical that both of you know exactly where you stand. Otherwise, you may end up in litigation down the road.

Getting your partnership and other business documents in place

If you’re starting a business, you should consider documents like this — and many more. You also need to know how to legally draft and file them so that they hold up when needed.  Working with an attorney is wise, especially when your business is in its early stages.