Most people enter partnerships with good intentions, but things don't always work out. "It's important to plan for problems," says Adler. "Like prenuptial agreements, partnership agreements plan for conflict ahead of time--just in case."
Whether you write up a partnership agreement yourself or hire a lawyer, make sure your agreement includes the following:
- the name of the partnership
- when the partnership will begin and when, how and why it may be dissolved
- the initial capital of the partnership
- controls on who can withdraw money; agreement that both partners must consent before money is removed
- a specified draw account and a monthly allowable amount for each partner
- how profits are distributed and who handles expenses
- the general rights and responsibilities of each partner
Putting these items on paper shouldn't cause any problems between you and your prospective partner. If anything you include kills the deal, says Adler, then you'll be better off looking for a more compatible partner.
Michael Adler, c/o Perry Polamero, 1192 N. White Ave., Pomona, CA 91768, (909) 623-5281
Coil & Associates, (714) 573-8226, fax: (714) 505-1689
Idora Silver & Associates, (800) 682-2929, fax: (800) 682-2929
Smith-Johnson Publishing, 175-14 73rd Ave., Flushing, NY 11366, fax: (718) 591-0227
Amy Stark, (714) 544-7609