Handshake agreements are created over coffee or late-night drinks for exciting new business plans. A partnership may one day have been nothing more than such an agreement, but from a legal standpoint, it creates an opportunity to protect each member’s rights and define obligations.

At AttorneyX, we support the development of new businesses and the capture of new opportunities through the formation and management of partnerships. It is, without a doubt, an area that requires careful planning and execution. As a dedicated partnership-focused law firm, we work closely with businesses that are transitioning to, away from, or redefining this formal structure.

Types of Partnerships AttorneyX Helps

Our partnership attorney can help you with all types of partnership styles, including the following:

Limited Partnership

A limited partnership (LP) is a business structure in which two or more parties own the company. However, only one of the partners manages the business. Typically, a general partner will maintain full liability for the business’s finances and will maintain responsibility for the management of the company. The other partner has a limited liability investment. 

A limited partner is only liable for the amount of their investment in the business. They do not play a day-to-day role in the business. Our legal team will help you create and manage limited partnership roles within your business.

General Partnerships

A general partnership is a business structure in which two or more parties carry on a trade or business together. Each of the partners will contribute to the business, including through monetary investment, property investments, time and labor, as well as special skills. At the same time, both parties share the liabilities as well as the profits from that business. 

Establishing a general partnership – even if it is 50/50 – requires careful planning to minimize the risk of misunderstandings. AttorneyX will create and manage these agreements for you.

Other partnership arrangements also exist. For example, you may wish to consider a partnership vs joint venture. 

A joint venture is a collaboration between two or more parties. However, in a joint venture, the objective tends to be a short-term and project-specific effort. A partnership is typically meant to build a long-term business objective. If you plan to enter into a short-term arrangement, speak to AttorneyX about the creation of a joint venture.

Partnership Operating Agreements

As a partnership agreement lawyer, you can expect our legal team to help you create and manage agreements for your business. A partnership operating agreement defines who will make decisions, how the company will operate on a day-to-day basis, as well as long-term objectives related to profits and liability. Partnership agreements typically outline:

• Identification of partners
• The purpose and name of the partnership
• Who is contributing and how much
• Responsibilities
• Withdrawal and dissolution strategies
• Profit and loss sharing
• Dispute resolution
• Liability clarification
• Addition of new partners
• Decision making

You can expect our partnership agreement attorney to work with each partner to formulate an agreement that is representative of the goals of your business. It is beneficial for all people to specifically review partnership agreements with their own legal counsel to ensure they understand their roles and responsibilities.

Advantages of Forming a Business Partnership

Businesses must consider the implications of the formation they plan to use. That means doing a bit of forward thinking to determine what you want your business to offer, how it will be run, and what limitations are present. A partnership offers a number of benefits. These may include:

Easy to Set Up

A partnership is fast to set up. It does not require significant amounts of due diligence or extensive legal steps to establish the business. It is a business formation that is legally recognized, but it is not complex in form.

Less Expensive

A partnership is not expensive to set up either. Most often, a formal agreement, created by a partnership attorney, enables both parties to come together to make decisions directly. The process does not take extensive legal steps, so costs are lower.

Shared Responsibility

The core benefit of utilizing a partnership business formation is the shared financial contributions. Even if both parties do not directly operate the business on a day-to-day basis, both are contributing financially in some way. 

In a general partnership, it is possible for each partner to equally invest in the business. Pooling resources tends to be easier to do than trying to foot the entire investment yourself. For many businesses, this method helps to provide a better foundation for success since securing credit, building seed money investments, or creating a financially sound foundation is easier to do when at least two people are coming together.

Partners Benefit Each Other

In the ideal scenario, partners both contribute to the business in a meaningful way and complement each other. For example, each partner brings different strengths to the arrangement. 

Each partner may have different resources or experiences to build the business. Working separately, this would not be the case.

Incentives for Employees

Partnerships often have an employment advantage over other types of business formations. That is, it allows the employees the opportunity to, one day, become a partner. If and when employees see this as a long-term opportunity for them, they may be more likely to work towards the success of the company, remain highly motivated towards business success, and gain necessary skills to help them contribute more fully to the business.

A domestic partnership lawyer like AttorneyX enables you to create a strategy that works for your business objectives. When you consider the formation of a partnership, there are clear opportunities that could support your business’s long-term growth.

Downsides of a Business Partnership

Core to creating a successful business partnership is understanding its limitations. There are several specific factors to take into consideration before you enter into a partnership relationship with the other party.

Liability Is Shared

In a partnership of any form, the owners maintain liability for the business. This means that if someone sues your company, you are responsible, and your personal assets could be exposed if you do not take the necessary legal steps to protect them. 

Partners are liable not just for their actions, though. They are also liable for the actions, business decisions, business debts, and business mistakes made by all partners. This shared level of liability is an important and careful decision when moving towards this framework.

To minimize these risks, AttorneyX works with business partners to establish liability guidelines and rules. We also work with businesses to establish protections to safeguard personal assets from claims made against others.

A limited liability company formation may be beneficial to some companies. For example, an LLC creates a way to minimize financial losses to personal assets. While not the same as a partnership in terms of how it is set up, it may be a consideration. 

Note that LLCs and partnerships are two different business forms as recognized by the IRS. However, it may be worth discussing this option with our team if you are worried about liability risks associated with your business.

Disagreements

No two people think the same. That is what makes people unique, but it also introduces risks to a business agreement. When there are numerous partners present, that can mean there will likely be additional risks of disagreements. 

When it comes to disagreements, the ideal situation is for companies to have a structure in place to navigate the decision-making and hardships in a meaningful and structured way. However, it is critical that partners realize that, before making decisions, they must consult each other and all partners will need to compromise from time to time.

As a partnership dispute lawyer, AttorneyX has worked closely with numerous partners who are struggling with decision-making, overall frustrating mistakes, or disagreements. In some situations, our partnership dispute attorney can help you formalize a way to navigate these difficult conversations and a process for overcoming disagreements. However, in situations where it does not work, a business partnership dispute lawyer from our firm can also help you navigate the dissolution of the business formation.

Shared Profits

Another disadvantage to forming a partnership is that profits are shared. More than one party owns the business, and as a result, the profits are divided between the partners. Unequal contributions of time and resources, and one party putting in more effort than the other, can lead to troublesome decision-making and hurt feelings. 

Ultimately, it must be clear how profits will be divided, and partners must be on the same page about expectations.

At AttorneyX, we offer a wide range of resources to help you overcome the limitations and risks of partnership profit sharing. By creating a clear, well-outlined plan, it is possible to clearly define what your objectives are, how disagreements will be settled, and what expectations are for each partner.

How AttorneyX Can Help You Build a Solid Partnership

Building a business is an exciting opportunity, but one riddled with “what if” and legal jargon that makes it hard to know where you stand. As a small business owner, AttorneyX offers the resources and guidelines to help you build a strong partnership that operates in a way that is meaningful to your objectives and meets the legal requirements.

Our legal team can help you with every aspect of your partnership, including:

• Establishing your partnership. The legal formation of a partnership begins with creating a plan.
• Navigating investment objectives for each partner within the business.
• Create operating agreements for your business.
• Support you in the creation of business partnership agreements that align with objectives.
• Create plans for mitigating liability risks, as well as handle liability claims as they arise.
• Aid in the establishment of your business’s dissolution or exit plan as applicable under your objectives.
• Work to navigate disputes and offer strategies to overcome impasses in a meaningful way.

Whether you are building a partnership from scratch or navigating changes in your current operating format, AttorneyX offers the legal guidance and knowledge you need. We take pride in not just forming businesses and navigating bad times, but also providing our clients with the hands-on support they need in building success.

Contact AttorneyX for Help Today

When you are ready to formalize your partnership and move beyond that handshake deal, turn to AttorneyX. With years of experience and a high level of passion for meeting our clients where they are, we are here to help you through the entire process. To establish a partnership or get help managing an existing one,

When you are ready to formalize your partnership and move beyond that handshake deal, turn to AttorneyX. With years of experience and a high level of passion for meeting our clients where they are, we are here to help you through the entire process. 

To establish a partnership or get help managing an existing one, contact us now. Let AttorneyX offer the insights you need at this time.