When entering into a partnership, it is essential to properly document the terms of agreement amongst the partners. Too many businesses and investments fail because of the partners’ inability to work together or to resolve problems that could have been avoided had they completed a partnership agreement.
Don’t make the mistake of only considering the profit and loss percentages and share of ownership in your partnership agreement. You must also consider the parties responsibilities and authority to make decisions, how additional funds will be contributed, how deadlock gets resolved, how title to company assets will be held, how a “cash” partner is repaid their capital, and what happens if a partner dies or becomes disabled, etc.