Smith + Schwartzstein
Located In Morristown, NJ and New York, NY

Don't rely on a do-it-yourself contract, be prepared

Business partnerships are great in a lot of ways; they split the liability of being in business and help you avoid having to manage everything on your own. There is some potential for trouble with these relationships, though, especially if there is a dispute between the partners.

Since there is a risk of disputes, there should always be a partnership agreement in place. This agreement holds information such as how you'll distribute profits, what your duties are and what to expect out of your partner, the length of your partnership and how you can end your partnership if necessary.

You and your partner should work with an attorney to draw up an agreement that works well for your situation. Any attorney will tell you that this is an important agreement and that it's a good idea to have individual attorneys review the terms and make sure they're in your best interests.

Having a partnership agreement helps you deal with changes in your life and with your partnership as a whole. It helps you avoid liability and legal issues, and it can help you avoid tax-related problems by showing how your profits are distributed among the people involved in the business.

While creating your own agreement is possible, it's a bad idea to do so if you're not well-versed in law yourself. A do-it-yourself partnership agreement could be poorly worded or confusing, leading to disputes or conflicts later on. It's better to create a legally binding contract with the help of a professional now, so you don't have any surprises later.

Source: The Balance Small Business, "Why Your Partnership Needs a Written Agreement," Jean Murray, accessed May 11, 2018

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