Early in an entrepreneurial venture, you must decide what form your business will take. Partnerships are a good choice for small businesses because they can be limited or general. Once you have chosen who you are doing business with, you should formalize the relationship with a partnership agreement drafted by a seasoned attorney.
A contract between business owners can act as a roadmap in case issues or disagreements arise. Work with an Atlanta partnership agreements lawyer at Sparks Law to create a concrete document that guides your business’s future success.
Under Georgia law, any adult of sound mind or legal business entity can become a partner in a business venture. For example, two brothers can be partners in a candy store. A corporation and a limited liability company can be partners in a joint venture. An individual adult and a limited partnership can form a second partnership with an agreement tailored to the business they intend to conduct.
Georgia designates all partnerships as pass-through entities. This means that partners in either general (GP) or limited partnerships (LP) report their share of profits and losses on their individual state and federal income tax returns.
A general partnership is more straightforward than a limited one, which could be desirable if the business is small and there are only one or two owners. However, it is still essential to work with an experienced lawyer on a partnership agreement. General partners are personally liable for the business’s debts, no matter which partner incurred the debt.
Limited partnerships include both general partners and limited partners. Unlike general partners, limited partners are not responsible for any business debt beyond the amount they have invested. Although general partners assume more risk, they are the ones who make management decisions. Limited partners are usually investors who can take advantage of a profitable opportunity, knowing they are only liable to the extent of their investments.
When we draft a solid partnership agreement for an Atlanta client, our attorneys help limited partners gain a broader understanding of their business and what they are investing it. This is also key in protecting general partners from misunderstandings down the road.
A partnership agreement is a contract in which partners agree to the terms that guide the business venture. A proper partnership agreement may cover the following points:
Although the above list provides a good starting point for a partnership agreement, a skilled local attorney can help you determine other important elements for the specific needs of your business. For instance, a contract could address how to proceed if a partner decides to leave the company or becomes incapacitated and cannot fulfill management duties. The legal team at Sparks Law can go over your unique areas of concern and ensure that these are addressed in your partnership contract.
Partnerships are a versatile option for your small business structure. However, a small number of partners does not mean that you are immune to disputes and internal problems.
A well-crafted legal contract is critical to keep your partnership running smoothly. Rather than trying to draft this document from a vague template you find online, work with one of our Atlanta partnership agreements lawyers. The team at Sparks Law is ready to help secure your business against litigation, misunderstandings, and future problems, so call us today to get started.
