Tag Archives: partner

Important Topics to Cover in Your Partnership Agreement

When you enter into a business venture with another party, it is crucial that you draft and sign a partnership agreement.

Partnership Agt pic

Many partners enter into business together because they are friends and they don’t think a written contract between them is necessary. However, having an agreement in place can help avoid disputes as well as help preserve your relationship.

Although every partnership is different, there are certain terms that should be included in your written agreement, including:

  • Identifying each partner’s role. Having a plan for the role to be played by each partner in the business will assist in making things run smoothly. The agreement can detail how each partner will contribute to the joint venture, whether by supplying labor, services or financial contributions, so there is no confusion or misunderstandings.
  • Ownership. The partners’ percentages of ownership should be specifically detailed in the contract. Topics to cover include how profits will be allocated, draws will be handled, and distributions will be made.
  • Binding authority. The partners should agree how business decisions will be made. For example, you may wish to limit exposure to liability by agreeing that a partner is required to obtain the other partner’s approval before taking binding action on behalf of the partnership entity. The agreement should also outline the operational and management responsibilities of each partner, including what specific actions require a majority vote.
  • Dispute resolution. If a disagreement should arise between the partners, it is beneficial to have a strategy in place for how to resolve the dispute. For example, the contract may require the partners to go to arbitration instead of filing a lawsuit to resolve disputes.
  • Dissolution. If the partners decide to dissolve the partnership, it will go smoother if you the contract details the dissolution process.

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Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

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Should Your Entity be a Limited Partnership?

Limited Business Partnership

Attorney serving Palm Bay, Florida

There are a variety of different legal entities to choose from when you are starting a business. The limited partnership (LP) is an important entity to consider if you want to have partners, but you want to be protected from liability.

The LP is typically used by businesses that want to work with a partner on a single project or for a limited period of time. In fact, the LP is commonly used in real estate development projects. The general partner is allowed to manage the daily operations of the construction job while the limited partners invest money. The LP is beneficial for investors who are interested in investing their money while having limited liability.

A few other pros of forming a LP include:

  • Anonymity can be maintained because the LP agreement is usually a private document
  • The LP is a separate legal entity that can own real property or other assets
  • There are pass-through taxation benefits, so profits from the LP are reported on the partner’s personal tax returns
  • Forming a LP can help with establishing legitimacy and credibility for the business
  • Employee benefits can be deducted
  • The LP provides protection from lawsuits. If a limited partner is sued, the property owned by the LP is protected. Additionally, if the LP is sued, the limited partners can be shielded from liability.

There are a few cons associated with forming a LP. The burden of running the business and the liability for the debts of the LP falls on the general partner. Also, in order to comply with the mandatory corporate formalities that keep the business in good-standing, you must keep up with a significant amount of paperwork. Finally, there is divided power among the partners, which can sometimes lead to difficulties.

If you are interested in learning more about forming a LP, contact Faro & Crowder, PA today.

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