Brought to you by the RI small business experts – Lucier CPA, Inc.
All partnerships should start with a partnership agreement. The partnership agreement can be made up of a number of separately described agreements. For example, the partnership agreement might include how the company will be funded and what each partner will be investing. It most often includes a general statement about the type of business the partnership will be conducting and may even provide details around the individual partners’ job descriptions. Based on each partner’s particular job, it will also talk about how partners are compensated and how profits and losses are split among owners. In addition to the general operations, the agreement should contain provisions as to how and when a partner’s interest in the partnership is sold or purchased and when dissolution of the partnership would occur (Like a buy-sell agreement). A qualified attorney should be considered when drafting and reviewing the partnership documents. These documents help avoid litigation that can be very costly to the partners and the business.
The Center for Disease Control (CDC) provides studies and reports with detailed statistics on the success and failure rate of marriages in the United States. It would be interesting to see what type of information would be available if they were also able to study and report on the success of business partnerships.
It can be said a partnership is a bit like a marriage. You must trust, respect, and have the commitment to work together for a common goal. It is also common to hear that a partnership will never last, which is true because we will either outlive the business or the business will outlive us. Here are some pointers on making a business partnership last:
Ten Ways to Make a Partnership Last
1. Never insist on being right.
2. Work with your partner; teamwork is the key.
3. Start with rules and review documents when necessary.
4. Don’t embarrass or criticize your partner in front of others.
5. Be communicative, not confrontational.
6. Recognize mistakes, but forgive and move on to new business. 7. Embrace challenges and work together to resolve them.
8. Share in the successes of the partnership.
9. Don’t let outside distractions affect the goals of the partnership. 10. Be positive, have fun, and applaud your partner’s efforts.
Especially for partnership based businesses, advisers are typically very helpful in uncovering areas that need to be researched, discussed and, if necessary, documented with agreements among the partners.
Lucier CPA, Inc. 1308 Atwood Ave, Johnston, RI 02919 (401) 946-1900