Protecting Your Business From Partnership Breakdowns
by Jacqui Brauman
Starting a new business can be exciting and wonderful. But you need to think about what happens if things don’t go as planned.
Unfortunately, when disputes happen in business, they’re often not addressed until after problems have arisen. It’s best to address important issues such as ownership and compensation before disputes occur so that you can avoid costly legal challenges down the road.
There are many non-personal reasons for ending a partnership. However, not all of them relate to personal conflict. For example, if a partner gets in a car accident and cannot continue in the business or if he or she passes away suddenly, your company will need to be split up in order to pay each partner’s share out evenly. Likewise, there is always the possibility that one partner may become terminally ill and die during their time with you as individuals; how should you handle this? Often times people don’t realize that without an official agreement outlining each person’s portion when someone leaves unexpectedly, surviving owners can just keep everything for themselves instead of dealing fairly with other partners’ families post death.
Trust is an important part of any business relationship, and this cannot be more true in a business partnership. It’s essential to have a legal agreement in place that addresses the key issues like ownership structure and voting rights on major decisions. The agreement should also address issues such as how you operate the business, what happens if you disagree with each other, who manages the day-to-day operations, how profits are split, and what happens if you want to end the partnership.
If you have any questions about forming a business, or establishing your partnership agreement or shareholder’s agreement, TBA Law is here to help. Get in touch with our team at 1300 043 103 or send an email to [email protected]