If you and another person commit to going into business together, you may decide to form a partnership, which can be general or limited. Although Texas does not require a written partnership agreement for the company to do business, it is a good idea to draft one with legal assistance. Without a written document, you may run into disputes down the road when partners cannot remember what they agreed on.
Owners should consult a Texas partnership agreements lawyer to draft a concrete document that can guide their business. At Sparks Law, our skilled attorneys can help secure the success of your partnership by creating contracts tailored to your specific business needs.
Partnerships offer owners many advantages, including limited filings and an easy tax structure. The individual partners, not the business, report the profits and losses of the company on their tax returns. Although general partners are liable for business losses and lawsuits, owners can change by electing to be known as a limited or limited liability partnership.
The most common partnership is a general one, in which at least two people get together to operate a for-profit business. Partners are not required to file documents with the Secretary of State. They will have to file an assumed name certificate, or DBA, with the county in which the business maintains an office if the business name is different from the surnames of all the partners.
If the partners work from home and do not maintain a separate office, they must file a DBA with the clerk of each county where the partners do business. A lawyer experienced in Texas partnerships could help file these documents and memorialize important information in a written agreement.
At least one general partner and one limited partner make up limited partnerships, which must be registered with the Secretary of State. A written partnership agreement should include the company business practices and the roles of general and limited partners. Limited partners are investors responsible for the business debt only up to their invested amount, while general partners run the business with profit in mind. A dedicated local attorney could draft a comprehensive partnership agreement so limited partners understand how the business runs, and general partners can head off misunderstandings before they happen.
General partners can limit their exposure to liability for the company’s debts and lawsuits by filing paperwork with the Secretary of State to become a limited liability partnership. In this structure, general partners are only liable up to the amount they have invested in the business. A knowledgeable partnerships attorney can further explain the benefits of this structure and outline specific terms for partners in a contract.
All partners should discuss and approve a partnership agreement, which acts as a contract that binds the partners to its terms. Partners can end up in court for breaching the agreement. The document should outline the partners’ rights and responsibilities, as well as:
At Sparks Law, a seasoned attorney could add other elements to a partnership agreement depending on the owners’ situation. For instance, owners may want a provision for dealing with an incapacitated partner who can no longer work. Partners should discuss all aspects of this important document with a member of our legal team.
If you want a simple, versatile structure for your business, a partnership may be right for you. This structure allows you to choose a level of personal protection against business debts, and the tax status solves the problem of corporate double taxation.
To take full advantage of these benefits and ensure your company’s success, speak with a Texas partnership agreements lawyer at Sparks Law. Our legal team could help safeguard you and your partners from business litigation, misunderstandings, and future problems. Call today for your initial consultation.
