If you enter into an unequal partnership, it is much better to structure the company as a limited liability company. And when you start a business, you should choose your creative state very carefully. Corporate law is older and has more legal precedents, which is important in developing an agreement and dealing with disputes if the worst happens. Corporate laws offer more protection to minority shareholders than LCs. While some states have extended the same protection to LLC members, not all do. A New York court recently ruled that LCs do not expressly offer the same safeguards. Don`t underestimate the importance of this judgment: it means that as a member of an LLC, you are less likely to win a debt against your partners than if you are a shareholder in a company. Last week, I wrote about the difference between “fair” and “equal” in a partnership. This article was born from an interview with my colleague Megan Eiss-Proctor, who this week wrote a blog post about it. Over the past week, we have talked more about the legal impact of an “unequal” or “proportional” partnership.
Sometimes it`s unexpected. That`s what makes business so exciting – and sometimes boring. Your partnership agreement should look at possible scenarios and concerns, such as. B: If the partner does not die or is disabled, but a partner does not wish to retire, a partnership contract determines the mechanism for a partner to resell shares of the partnership to the company or to a third-party buyer in good faith. Your friend is in any case a thorough and thoughtful agreement that is in effect when the business starts, and every owner fully understands before a problem occurs. A partnership can lead to great things. There`s nothing like having someone out there who makes fun of your jokes, confirms your ideas and warns you when you`re going to destabilize. The most important institution of society is marriage, it is really a partnership. A life without partnerships would be less full and imaginative.
But there are good ways to work together and wrong ways to be a partner. If you want to avoid such an end for your business, you should create a buyout contract or a buyout contract that can be included as part of your partnership agreement. A buy-back contract helps partners decide and plan what happens when a partner retires, dies, is disabled or leaves the partnership to pursue other interests. Such an agreement could, for example, allow partners to purchase the interests of an outgoing partner so that the activity can continue as usual. Is your company a proportionate partnership? Tell me about this in the comments or tweet me @furiouslymandy with the hash-tag #committed. If you are willing to share more details for a survey I am conducting, please complete my questionnaire. What happens if something changes with respect to the ownership of the company? If you sell it, which partners will have what? What is your partnership to welcome new partners? If a partner wants to retire from your business, what happens? What are the possibilities of buying another partner? Your agreement should carefully describe how property interests are treated in different scenarios such as this and others, for example. B in the event of the death of a partner, retirement or bankruptcy. And to protect your business from partner departure, starting a new business and stealing from your customers, you should also consider adding a non-compete clause. Better to be safe than sad! One way to design the partnership agreement is to provide disability insurance for each partner.