With the advent of recession, the tightening of bank loans and lack of capital, small businesses need alternative solutions to help them collect the resources needed. Partnering with other entrepreneurs or small businesses can create opportunities for growth and expansion; Therefore, the potential benefits of partnerships must be considered. Partnerships are a great way to invest new capital, get access to new markets, diversify products and services, and share financial risks and responsibilities.
In very simple terms, partnerships are legal agreements between two or more parties where parties agree to share profit and business losses together.
As we admit above, the partnership has many benefits but also has several fallies. Partnering with other companies can be great when you have created a partnership agreement with affordable expectations. So, before heading towards partnership with another, make sure you have discussed better points than a good partnership agreement.
See below the basics of a good partnership agreement:
Agree with the name for the partnership
Decide the destination and destination of partnerships
Specifies the start date and duration of partnership
Determine where the main office will be located
Determine meeting guidelines
What percentage details will be owned by each partner in assets, responsibilities, and income
Agree and determine the contribution of each partner in capital and assets
Determine the liability limit for each partner
Agree and specify rights and benefits for each partner such as insurance, holiday and travel time
Determine the ability of each partner to redreg the contribution and access of loans from business
Decide and state how benefits and losses will be divided
Determine Accounting Year, Accounting Method and Auditor Choice
Show what partner authorization to sign a binding agreement
Explain the requirements to recognize additional partners
Determine the term for expulsion, voluntary or forced withdrawals from partners, deaths or the inability of a partner
Determine income and capital distribution if dissolution, death, inability
Details of the provisions of the continuation of the partnership, should the couple die or withdraw from the partnership
Determine how the debt and partnership assets are divided into withdrawal, the inability or death of a partner
Determine the rights of the partnership name
Spell rights and use of property rights information if the partnership is resolved
In terms of disputes, determine what resolution method will be used
Determine the procedure for changing partnerships
To create a large partnership, you must start with a great partnership agreement. A good partnership agreement describes expectations and helps prevent unrealistic or unreasonable assumptions. Also, when compiling an agreement, it is a good practice to have the help of a lawyer.