Are you considering forming a business partnership? This article explores some of the top reasons you need a business partnership agreement in Florida.
If you are thinking of going into business with one or more partners, you may be wondering, “Do I need a partnership agreement (or shareholder or operating agreement) to be protected?” While this document is not a legal requirement in Florida, it is an essential part of building a successful business. In addition to helping you and your business partners understand your roles and responsibilities within the business, it can also protect your interests and the interests of the company in case unexpected circumstances arise.
These five reasons to include a partnership agreement in the early stages of forming your business will help you decide whether it is right for you.
Why You Should Have a Partnership Agreement
1. Make Sure Everyone Agrees on Important Issues
Don’t make the mistake of assuming that you and your partners are going to agree on every decision you make about your business. Every business partnership experiences disagreement within its leadership, but if you lay out in writing how your organization will handle the most important decisions, you can avoid a lot of tension—not to mention reduce the chances of litigation should a disagreement cause conflict.
2. Control Who Can Have Ownership
A partnership agreement gives you the option to put restrictions on who can own a piece of your business. For example, if one partner decides to sell his or her shares in the company, an agreement can prevent them from selling to a competitor or an unwanted future person.
3. Remove Non-Performing Partners
In some agreements, each partner is assigned duties and responsibilities. If one partner is not holding up their end of the bargain, it may become necessary to remove them from their position. A well-crafted partnership agreement should include a process for removing a non-performing partner before they damage the company.
4. Avoid Florida’s Default Rules for Partnerships
Forming a business partnership does not require a written agreement, but if you want to avoid Florida’s default rules for partnerships, you should consider having one. Statutes and rules are meant to supplement basic principles on how business should be conducted but are often lacking or contradict how you may want to run your business. Your agreement should include provisions for any situations that you do not want to default to the applicable statute.
5. Prepare for Unforeseeable Changes in Leadership
In Florida, unless you have a partnership agreement that states otherwise, if a business partner passes away, his interest can be subject to hereditary proceedings or probate. Moreover, you could end up with the deceased’s family members as unintended partners. If you would like to avoid this, your agreement can stipulate what happens in the event of the death of a partner.
Need help creating a partnership agreement that fits your needs?
Are you interested in forming a partnership to do business in Florida? You should speak with an experienced attorney to learn more about what you should include in your agreement.
Get in touch with The Saltiel Law Group to set up a consultation with an attorney experienced in business law.