They say that teamwork makes the dream work. In fact, many of America’s most successful small businesses were founded by teams of two, many with no partnership agreement in place when they were first formed. Some of these dynamic duos went on to lead the world’s most lucrative companies.
However, not every casual business partnership will end with its members becoming billionaires. That’s why it does not make sense for most businesses to start with no business partnership agreement ironed out.
A partnership agreement lays out the responsibilities of each partner in the business. It will also detail how much of the business each partner owns and how much profit and loss each partner is responsible for. A well-crafted partnership agreement also includes rules about how you will manage the business and addresses succession planning issues, such as the death or departure of a partner.
An experienced Milwaukee business lawyer can help you work out the details of your Wisconsin partnership agreement. The Mallery s.c. team handles all manner of partnership formation and helps partners put partnership agreements in place.
Types of Partnerships in Wisconsin
Wisconsin has four types of partnerships, any of which can be a great choice for entrepreneurs interested in operating as a partnership in this state. Those business entity types include:
- General partnerships,
- Limited partnerships,
- Limited liability partnerships, and
- Limited liability limited partnerships.
Each partnership type carries different risks if you have no formal agreement with your business partner.
However, if you have no written business agreement in place, you may be unable to carry out the day-to-day tasks of the partnership, like paying yourself a salary. Instead, you and your partner may need to wait until the end of each year and split the partnership’s profits and losses equally. Some business owners may be happy with that arrangement, but others may need regular income each month. Our experienced legal team can help you evaluate the pros and cons of each type of partnership as you set up your next business venture.
Why You Need a Partnership Agreement
When you have no business agreement with your partner, your partnership’s operation will be governed by your state’s partnership laws. State laws offer a one-size-fits-all approach to running a partnership and resolving common issues. However, these laws are not tailored to your business needs and often lead to results you do not want. A written partnership agreement can help you address the issues that are most important to your business and partners.
For example, when there is no partnership agreement specifying the terms on which a partner can leave the business, the partners will have to follow the default rules. Under the default rules, the partnership would need to be dissolved and re-formed when one of the partners wants to leave the business. If you are concerned about being in this position, contact a member of our legal team today. The Mallery s.c. business and corporate attorneys have extensive experience helping businesses that currently have no partnership agreement.
How To Create a Partnership Agreement
To create a partnership agreement, you will need to collaborate with your partners and think strategically about where your partnership is now and where you want it to be. The partners need to make decisions about each partner’s role. You will also want to decide what financial obligations each partner will have, how profits and losses will be allocated, and how you will handle partners joining and leaving the partnership.
It is very important to make sure all of the partners are on the same page when starting a business. Conflicting visions and unspoken disagreements can be as troublesome to a new venture as not having a partnership agreement in place.
As with all businesses, there will always be disagreements to resolve and difficult decisions to make in the life of your partnership. A partnership agreement will not prevent all hardships, but it can help minimize disputes with your partners. Having a partnership agreement can give you peace of mind by providing clear guidelines to follow when issues arise.
How Mallery s.c. Can Help
At Mallery s.c., our experienced business attorneys give you large-firm quality for small-firm value, often directly from our shareholder-level lawyers. Our attorneys will provide you with the dedication and attention you deserve. We understand business, and we customize our strategies to meet your unique needs. We’re here to help you put your business on the path to success. Contact us online or call us to schedule a consultation.