When starting up a business in Florida, an entrepreneur has many challenges to overcome to put a new startup on solid ground, including getting funding for the project and doing the market research to find the right combination of location and demand for their products. Businesses start up all the time with the help of friends, family or co-workers who provide the initial investment or become partners in the venture.
As is the case with any business formation, there are many advantages to forming a partnership as long as it is set up correctly. Having a partner means that you have another person to share the responsibilities of business ownership, as well as having someone who can expand the circle of contacts who might be clients or investors.
What are the key elements of a partnership agreement?
Some elements to consider when drawing up a partnership agreement include:
- making sure the contract outlines the contributions of each partner, including future contributions and commitments, such as the initial financial outlay or the investment in time, effort, customer referrals or equipment
- outline of the distribution and percentages of profits, salary and bonuses, including who will be paid first
- options for buying out partners in the event of withdrawal, bankruptcy, retirement or death of a partner, as well as a non-complete clause
- identifying responsibilities of each partner for making decisions, including which decisions require unanimous consent and which partner(s) make daily or long-term decisions
- outlining dispute resolution options, such as mediation or arbitration, to avoid potential litigation in the future and keep disputes out of the public record
- considerations for the potential dissolution of the partnership, governed by state law
What kinds of partnerships are formed in Florida?
Florida law recognizes two types of partnerships, general partnerships and limited partnerships. In a general partnership, the rights and responsibilities are shared equally among partners. A limited partnership has both general and limited partners, whose responsibilities are limited regarding the partnership’s actions, debts and obligations.
For St. Petersburg area entrepreneurs, having iron-clad contracts at the outset is the best insurance against problems that might crop up later on. Part of creating a solid foundation for your new business includes finding an experienced and knowledgeable business law attorney who will review or draw up essential documents that will ensure the busines is on the right track.