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Howdy Partners!

So, you have decided to become partners. Congratulations. A partnership can make for a great business relationship and you may become or remain, life-long friends with your partners. Or it may be strictly a business relationship. No matter why you decide to become partners, it is essential that you perform the legal due diligence such a step demands.

A partnership is a serious legal relationship. Perhaps no element of relationship points this out more than the fact that partners can legally obligate their other partners. If a partner takes a loan for the partnership, all of the partners are on the hook for the repayment of that loan. An internal dispute could lead to the end of your business.

That you need a written partnership agreement should be clear. In most cases, each partner should probably obtain their own legal counsel. The agreement that you sign will be a binding, legal document that will create duties and responsibilities.

It is essential that you understand the terms of the agreement, the rights and obligations you receive and how this functions within the context of the partnership. An attorney can also explain other forms of a business organization that may also serve your needs.

One important function of this agreement is to allow you to understand very early in the process the ramifications of the partnership and to set the proper expectations for all the partners.

Even if your business is beginning very small, you want to have the superstructure in place that will allow growth and that circumscribes that growth, to ensure that you and your partners can maintain a viable business strategy.

Improper setting of expectations, a mismatch of strategy and similar problems could lead to a premature failure of you business, as you and your partners windup arguing about conflicting plans and operational missteps as money bleeds away and with it, your business.

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