If you and a new business partner are creating a partnership agreement while starting your own financial advisory firm, it’s a good idea to get everything in writing before you begin. This legal agreement can give you guidance, and it can provide structure as you move forward. It can also help you avoid disputes or respond to them if they arise.
There are many different things that should be addressed in the partnership agreement, and it will depend on your unique situation. Below are a few examples of things that you may want to consider during this process.
Ownership percentages
First of all, you need to define exactly how much of the firm each of you owns. If it’s a partnership between two people, it may be split in half. However, splitting the ownership can get complicated if there are more owners, and you always want to have it in writing.
Duties and responsibilities
The agreement can also specify what each person will be obligated to do and what tasks they will be expected to perform. Essentially, your roles and job positions are being defined, even if your technical job title is co-owner or a partner at the firm. Defining these roles can eliminate disputes between business partners.
Exit options
Even though you’re just starting your business, it is good to address potential exit options. If someone wants to leave, what steps do they have to take? How do you address this financially? Who gets to keep the clients? Answering these questions in advance can make things go more smoothly.
As you develop and negotiate a partnership agreement, it’s wise to have legal guidance and to carefully explore all of your legal options.