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Your partnership agreement should include dissolution terms

No doubt you feel excited about starting your new venture, and you believe you have the perfect partner to help the business succeed. When it is time to create a partnership agreement, make sure you include all the salient points.

Your initial agreement should not only state how you intend to begin your partnership but also how you plan to end it should dissolution become necessary.

Include well-thought-out terms

The more detailed your partnership agreement is, the easier it will be to follow as you grow your business. Those details should include how you plan to run the business, divide responsibilities and make decisions. However, there may come a time when your partner wishes to join another company or just wants to retire. Perhaps the two of you do not get along as well as you had hoped and you want to end the partnership before too much bad blood develops. For these reasons, a dissolution strategy should also be part of your agreement.

Going your separate ways

If you have a well-written partnership agreement, you might be able to dissolve the partnership - no muss, no fuss. On the other hand, you might want to buy your partner out and keep the business going. There are various ways to do this, and an attorney experienced with business law can help you make the proper decision. You might negotiate an agreement whereby you assume primary control of the business and your partner agrees to take a minority position. Alternately, you might consider offering a payment plan to make the cost of buying your partner out less burdensome. Once you negotiate terms, make sure to remove your partner’s name from all business accounts. Your attorney will see to the filing of the necessary dissolution paperwork at the local, state and federal levels.

Staying friends

Although your attorney can also assist by helping to work out any disputes that might arise between you and your partner, your goal should be to avoid as much discord as possible. Remembering the optimism with which you started the business and the good relationship you and your partner had at that time, the future will look brighter for both of you if you are able to remain friends.

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