Having a partner when you start your business is a great way to make things a little easier and divide work in a more reasonable way. But a partnership is a relationship and relationships take work and can struggle under stress. That means that sometimes partnerships can end. Doing things right from the beginning can help you to avoid many of the legal issues you could otherwise face with a partnership.
Work with Contracts
Contracts are a legally essential part of running a business with a partner. Having spoken understandings with one another is great, but it can lead to misunderstandings and it won’t hold up in court. With a written contract you can make sure that you and your partner are on the same page and that you both agree to the terms you are establishing. These contracts will protect all parties from legal problems and will make sure that you both know what you are getting into and what the stakes are.
Divide Equity Fairly
With your partnership, you will have joint ownership of the business. This can be divided in a variety of ways but it’s important that the division is fair and that all parties agree on how equity is owned. How you divide your company’s equity depends on how you structure your business. The early decisions of how to structure your business can give you the framework you need to appropriately divide equity and make sure that it is done in a fair way.
Set Clear Priorities
One of the biggest problems that can come up in a business partnership is that the two partners have different priorities. If your priorities are significantly different than your partner’s then you may find that you both make decisions that the other doesn’t appreciate. Setting your goals and priorities clearly from the beginning will help you both to understand where the business is going and how you will work together. With that structure you can make joint decisions that both of you are happy with and in support of.
No one wants to think about having legal problems with their business partner, but it’s something you need to prepare for and try to avoid from the beginning. Communication is a big part of making this happen. Talk to your partner and work together to make sure that you are legally protected from the very first day of your business.
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