The key to a successful partnership is planning. If you are an entrepreneur that is just starting out or an established business that needs ongoing guidance, The Law Office of David Hyde is here to help. As your small business lawyer Chicago, David Hyde will make sure that you are set up for success. Call today for a free consultation at 312-210-9598.
Planning will help you avoid many common problems and disagreements that can arise in a business relationship like this. If you do not plan ahead, it will be more difficult to resolve issues later on down the road.
What is a Partnership?
A partnership is a business entity in which two or more people agree to share responsibility for the management and profits of the company. There are different types of partnership agreements. A partnership can be created by formally drawing up documents that outline the responsibilities and obligations of each partner along with rules concerning the handling of profits and losses.
A partnership can also be established informally by “the association of 2 or more persons to carry on as co-owners if a business for profit forms a partnership, whether or not the persons intend to form a partnership.” 805 ILCS 206/202. A person who receives a share of the business’s profits is presumed to be a partner unless that person was paid wages as an employee or compensated as an independent contractor.
In order to protect your business and avoid pitfalls that may come with a partnership, you need a small business lawyer Chicago that understands the nuance of the Illinois Uniform Partnership Act. The Law Office of David Hyde will help you establish a strong partnership agreement, so you can avoid problems and focus on the development and success of your business.
It is important to take care of partnership disputes before they occur. If you don’t, you may end up fighting with your partner and spending unnecessary money on litigation instead of focusing on the business.
The best way to avoid this is by having a plan in place. Make sure to review your partnership agreement carefully before signing it. Make sure it covers all aspects of how your business will operate and who has authority over certain decisions (i.e., who can make financial decisions without consulting the other partner). You should also make sure that there are no provisions that could harm either party if they were ever enforced by a court or arbitrator in the future.
Issues that can arise in a business partnership
Partnerships often have disagreements about who owns what. There may be contention around the assets purchased by the business. Business partners may disagree on what equipment or other items are necessary for the operation of the business.
Financial disputes are quite common. Debts incurred by the business, such as a bank loan, have been known to cause contention and lead to legal disputes. In addition, profit division and decisions about salaries can cause problems. There can also be questions about how much gets reinvested into the business.
Partners frequently disagree on what activities are appropriate for the partnership. For example, one partner may want to expand the business into new markets or sell products online, while another may prefer to maintain the status quo and focus on existing customers.
Many partners find that their expectations were not met by other partners in the business. Of course businesses want to avoid having to pursue legal action. However, if you need a small business lawyer Chicago to help you take that step, contact The Law Office of David Hyde.
Communication is essential in a business partnership.
Partnerships often fail due to a lack of communication and planning. As you are forming your partnership, make sure that you have an open line of communication between all parties involved. This will make it easier for everyone to express their needs, wants and concerns before any problems arise.
Maintaining healthy communication can build a stronger, more collaborative partnership, which will, in turn, develop into a more successful business. Successful partners are open to feedback and constructive criticism. They compromise when necessary and actively work to engage in open and honest dialogue.
To avoid disputes in the first place, try coming up with a plan together outlining exactly how things will work if there is ever an issue within the partnership. A small business lawyer Chicago can support you with this when you are discussing business strategy. And your attorney will be able to help you address disputes as they arise.
For example: If one partner wants to leave or sell their share of the business while another doesn’t want them too; what happens then? Or what if one partner doesn’t like another’s idea for improving efficiency at work? It’s best not to wait until these situations occur before figuring out how they should be handled because once again, this could lead directly into conflict between partners which will ultimately cause more harm than good down the road.
Make sure you establish clear lines of communication and schedule regular check-ins to ensure everyone has a clear understanding of how the business is progressing and what the current business needs are. Everyone should be aware of decisions made and there should be a clear decision making process.
A small business lawyer Chicago can help you resolve partnership disputes.
In order for a partnership to be successful, it is important that you define the terms of your relationship up front. This can be done through an agreement or contract between you and your partner(s). By defining the partnership up front, you will avoid disputes later on down the road.
If you are entering into a business with someone else, then it is important that each person knows what his or her role will be within the company or organization. If this information isn’t clear from day one, there may be problems down the road when one person thinks they have more authority than another person does over certain aspects of running their business together.
Although legal action isn’t always ideal, it can sometimes be necessary. The Law Office of David Hyde is here to help. The primary goal of our small business lawyer Chicago is to help our clients resolve legal issues in the most efficient and effective manner possible. We will do everything to save you time and money by avoiding a lengthy litigation process. We will pursue negotiation, mediation, or arbitration to resolve your legal problems so you can get back to business. At times, litigation is necessary, but whatever approach we take, we will make sure your business goals are realized.
