Sample North Dakota Partnership Agreement
Partnership Agreement in North Dakota: Mistakes to Avoid in Partnerships
Whether you are getting into a partnership business with your friends or family, you need to make sure that you have a strong foundation that will keep your business intact, especially if you go through hardships. You need to have a strict business ethos to love by, but most importantly, you need a rulebook/ playbook that will guide you when things get a little (or a lot) confusing or blurry. Essentially, you need a playbook that stipulates the rules you will be playing by, and in the event of a dispute or a misunderstanding, this rulebook should offer the right direction to ensure the success of your business partnership. The rulebook/ playbook we are talking about is the partnership agreement.
The partnership agreement, also a partnership contract represents the legally binding agreement that stipulates how the partnership will be run, how partners are expected to behave, and also what’s to be done in different circumstances where a higher authority and guidance is required. This agreement lays out the rules that govern the operations of the partnership business, it outlines the relationships between the partners, and most importantly, it outlines the roles and the obligations expected to be undertaken/ honored by each partner.
While handshakes and verbal agreements represent forms of agreements, these unwritten agreements are unreliable. When you are backed to a corner, and the only way out of a misunderstanding is a ‘he said, she said’ scenario, the chances of the business failing are quite high. A written agreement signed by all the parties to a partnership ensures that the partnership business sails through the toughest of times. Remember that business partnerships have a lot in common with marriages with statistics on the latter showing that at least half of all marriages fail. With this in mind, you need a partnership agreement, which is the marriage’s equivalent of the prenup. The partnership agreement in North Dakota guides you on important aspects of your partnership business, such as property division, dispute resolution, exit strategies, and also the distribution of income, among other things.
If you haven’t created a partnership agreement yet, and wish to get started on one today, we’ll help you get started with our free North Dakota partnership agreement form. This form is an online legal partnership agreement template that offers guidelines on how to create an enforceable and an airtight partnership agreement. It features all the important clauses that address different aspects of the partnership, ensuring the smooth running of the partnership business, by stipulating what every partner needs to do (no stepping on each other’s toes), while also offering guidance on how to resolve major and minor disputes. The agreement also ensures that ego, stress, money, and control issues don’t affect how the partnership business runs.
Now that you know why you need a partnership contract and how our business partnership agreement sample will guide you let’s take a look at some of the pitfalls you must avoid to ensure the success of your partnership business.
Mistakes/ Pitfalls to Avoid in Your Partnership Business in North Dakota
Failing to share the business’ expenses
One of the biggest mistakes that partners make is that they share in the profits of the business, but overlook the biggest operational bit of the business: the expenses. You might not think much into this, but every time you decide to share your capital in the form of resources, money, property, or information, you end up automatically giving away your enterprise-ability. Remember that we don’t live a perfect world where everyone you partner with is upright and full of integrity; your partner(s) may take the gifts you are giving and then run away with them. So, as you run your business in this imperfect world, remember that work-out an arrangement that involves sharing of the expenses also called an associative arrangement. Such arrangements make it easier for you to walk away if things don’t work out.
Not creating a written agreement
As mentioned above, the best business decision you could ever make in a partnership is to create and sign a partnership agreement. This legally binding agreement protects you from pitfalls, and it also ensures that conflict is resolved amicably.
Partnering with the wrong person
The other huge mistake you could ever make when forming a partnership business is deciding to partner with someone or ask someone to be a business partner, just because you cannot afford to hire that person, and the person in question possesses important skills you need for the success of the business. For example, if you are hiring an individual because they are a rainmaker, then you must specify in the contract what their role is, how much they will be compensated, and how they will be compensated.
Other mistakes to avoid
Overlooking the structure of limited partnerships
Failing to make provisions for an exit from the partnership
Expecting all partners to have an equal ownership share of the business.
Whether you are in Bismarck, Minot, Fargo, Grand Forks, Dickinson, Williston, Mandan, or any other city in North Dakota, we’ll help you get started with your partnership business with our partnership agreement forms downloadable online.
ND Partnership Agreement
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