Published on November 6th, 2018 | by Jose Vasquez0
What to Include in a Partnership Agreement for Startup Tech Companies
Use these key features to draft your partnership agreement.
Whether your startup tech company is legally considered a partnership, or whether you’re creating an LLC or an LLP, you’ll want to have a partnership agreement in place—proactively—to serve as a legal document dictating how the business will be run. Hopefully by this point, you’ve selected a business partner you can trust and work with professionally.
You’ll need to work together to include the following points, at a minimum:
- The name of the partnership. First, the easy one—you’ll need the name of the partnership.
- Contributions to the partnership. Next, you’ll want to define how each partner is contributing to the company from the outset. Are you both contributing the same amount of money? Is one of you contributing more resources? And if so, how does that affect the division of ownership?
- How you’ll split profits and losses. You’ll also need to talk about the money. If the company sees a profit, how are you going to split those profits? How are you going to split any and all losses?
- Decision-making power. Who is responsible for making decisions in the company? Will you each have distinct areas of authority, or will you make all important decisions together?
- Management duties. Next, you’ll need to decide how each partner will exist within the company. Will you both serve as a kind of co-CEO, with 50/50 authority? Or will one of you take a backseat to the other? Will you preside over different areas?
- Admission of new partners. If you decide to take on new members, how will ownership be changed? It’s a good idea to resolve this dilemma early—before it happens.
- How to resolve disputes. Inevitably, you and your partner will disagree on something. When you do, you need a framework in place for how to resolve disputes.
- How to handle a partner’s absence. If a partner withdraws, dies, or is otherwise incapacitated, how will the remaining partner handle the business?
Of course, for added measure, it’s a good idea to have your partnership agreement reviewed by a legal professional, as well as someone with entrepreneurial experience. If you’re interested in getting an outside opinion, contact me today!