Creating a partnership within an organization is quite common. It is the way many businesses operate today. What many don't realize is how important the partnership agreement is to the success of the partnership and the company as a whole. Today, we will explain the partnership agreement and why it is so important for all businesses in New Jersey.
The partnership agreement outlines all of the conditions and terms of the partnership. Those terms and conditions typically include the length of the partnership, the distribution of profits, the percentage of ownership between the partners, ways the partnership can be terminated, the duties of each partner, the explanation of management duties and how each partner can purchase his or her share of the partnership.
A partnership agreement is important because it helps to handle any and all issues regarding change, disagreement or confusion with the partnership. A partnership agreement helps the partnership avoid tax issues. The agreement will define how the money is being distributed and that it meets the proper tax and accounting practices.
The agreement will also help the partnership avoid any legal or liability issues. The agreement should spell out whether it is for limited partners or general partners. It will also explain how liability is handled for the entire partnership if there is an issue with one partner and liability.
A partnership agreement should also mention how a new partner can enter into the partnership. It should outline the circumstances where this would occur.
Are you creating a partnership in Morristown? Be sure you create a solid partnership agreement that protects both partners and the business with the help of an experienced business law attorney.
Source: The Balance, "Why Your Partnership Needs a Written Agreement," Nov. 16, 2017