Business partnerships can be very profitable and professionally rewarding. However, partnerships require certain amount of planning and groundwork to be successful. Here are a few common business partnership pitfalls to avoid:
Skipping the Agreement Entirely
The best advice for any formal relationship is, when in doubt put it in writing. For a business partnership, this may include:
- The purpose of your business
- The division of income between the partners
- How the partners will make business decisions
- How the partners will resolve disputes
- What happens when a partner leaves the business
A business partner agreement may involve some initial work and money upfront, but will help ensure that future misunderstandings or miscommunications will not blossom into a lawsuit between the partners down the road.
Using the Wrong Type of Partnership
Partnerships are not always equal and some partners do not want an equal relationship. Some partners might prefer to take more of a background role while other partners may want to be more active in the business. Legal business partnerships offer this flexibility though the partners should discuss this upfront before the business truly takes off.
There are generally two types of partnerships: general partnerships and limited partnerships. General partners are jointly responsible for losses and violations related to the partnership. Limited partners have limited liability though their control and profits over the venture may be more restricted as well.
There may be other types of business partnerships offered by the state of Maryland so check with a local Maryland business attorney for more detail.
Failing to Foresee the End of the Partnership
The unfortunate truth is that all business partnerships will end one way or another. A partner may want to move on to other ventures or spend more time with his family. Or perhaps a partner needs extra cash and wants to sell his or her portion of the business. Even if the business partnership lasts for decades, a partner may become incapacitated or pass away. A business partnership agreement should outline how much each partner’s interest is worth if a partner wants to sell their share and who succeeds a partner in the event of a sudden exit from the partnership.
Should I Hire a Maryland Business Lawyer?
Matters involving business laws can be very complex. Whether you are starting, merging, or dissolving your business, it is a good idea to hire a Maryland business lawyer for help. There are generally many different types of laws and regulations that apply when running a business. Hiring a local Maryland business lawyer will help to ensure that you and your business are compliant with all state laws, that any documents related to your matter are enforceable, and that you have followed the proper state procedures for all relevant matters.