Aldrich Law Firm, Ltd.
Aldrich Law Firm, Ltd.

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Avoid partnership problems with a strong formation agreement

Partnerships are a popular type of business entity in Nevada because they are relatively easy to create and allow entrepreneurs to get their ventures off the ground quickly. As noted by the United States Business Administration, the creation of a strong partnership agreement can help these businesspeople avoid many common pitfalls that plague this type of business entity.

A partnership, like any other business entity, has both benefits and advantages. While they can be easily created and allow businesspeople a great deal of freedom, partnerships are also prone to conflicts. One major reason for this is that business partnerships are bound by the decisions of any and all of their partners. These can lead to problems when partners disagree on the direction a business should be heading.

A good partnership agreement will provide everyone involved with a clear idea of how the business is structured and how disputes will be resolved. Some issues that partners may want to address in their agreements include:

  •          The division of profits and losses
  •          The structure and process of making business decisions
  •          Each partner’s authority and responsibilities
  •          Dispute resolution procedures
  •          How the partnership will be dissolved
  •          How to handle entering and exiting partners

It should be noted that by default, partnerships fall under the rules set out in chapter 87 of the Nevada Revised Statutes. These provisions may not work well with a particular business’ structure and management, but they will govern if no other controlling agreement exists between the parties. The law addresses many aspects of partnership relationships, including the allocation of profit and debt, the handling of partnership disputes and the assignment of partners’ interests.

John P. Aldrich
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