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Partnership

A partnership exists when two or more people share in the ownership of a business. By agreement, they determine the amount of time and money each partner will invest in the business and the percentage of the profits that each will receive. The extent of each partner’s authority and liability must also be made clear. To avoid misunderstandings later, the partners should put in writing everything to which they have agreed, preferably with the assistance of an attorney. There are a number of legal software packages and websites you can refer to for help, as well. The importance of a written partnership agreement cannot be overemphasized. In the absence of such a document, the courts can resolve any disputes that arise, but the outcome might not please one or more of the partners—and it will be expensive to reach.