Trusting your business partner is a good thing, but an oral agreement isn’t enough to sustain a business when complicating factors arise. Disagreements, departure, illness, or a takeover offer can quickly disrupt a partnership that was skating along without formalities.
Consulting a business attorney experienced in Florida law is key to establishing a strong foundation with your business partner—and appropriately documenting that working relationship. A partnership agreement is one of a suite of documents that are important to a new business.
Know What Runs Your Business
Partnering with a business attorney is a sure way to set up your business for any legal challenges in the future. An experienced attorney will make sure your partnership agreement and other documents complement one another and spell out all necessary terms and conditions.
An oral agreement is a good start, but unless your business has a written partnership agreement, the state will defer to Florida’s Revised Uniform Partnership Act rules if a dispute between the partners goes to court. This is a one size fits all solution that may differ significantly from the way your business is run.
Some of the typical issues that businesses have include:
- Different memories of the terms of oral agreements.
- No defined process for resolving disputes.
- No buyout agreement if a partner leaves or dies.
- Personal liability exposure if creditors seek payment of business debt.
- Unequal contributions of labor or cash that go on for a prolonged period.
These situations give rise to the need for a partnership agreement and other documents, such as the non-disclosure and non-compete agreements. It is one of several documents that every business should create with the counsel of an attorney to protect the partners and establish a framework that will stand up against legal claims. The basic suite of documents includes:
Partnership agreement. This contract lays out how the business runs, including who contributes funds, how profits and losses are divided, what happens if a partner leaves, who manages day-to-day decisions, and how votes are taken. Companies are free to structure these documents as they see fit. They also include:
- Profit splits
- Management structure
- Transfer restrictions
- Buy-sell mechanics
- Dispute resolution procedures
Articles of Organization (for LLCs) or Articles of Incorporation (for corporations). These are official forms required by the state of Florida that establish your business as a legal entity.
Internal governance and management documents. These include:
- Bylaws (required for corporations)
- Meeting minutes or resolutions
- Employment or independent contractor agreements
Risk and Liability Protection Documents. These include:
- Non-disclosure agreements which protect company information when sharing pricing lists, client lists, or proprietary information with employees, potential partners, or vendors.
- Buy-Sell Agreements that cover the next steps if a partner dies, withdraws, or becomes incapacitated.
- Non-compete or non-solicitation agreements. These restrict former employees or partners from stealing employees
- Insurance policies and certificates. These protect your company against liabilities and ensure compliance with workers compensation laws.
Service Agreements / Contracts
Part of your package of customer and vendor documents, these define deliverables, payment terms, warranties, and liability limits for clients or vendors. These are critical to enforce payments and limit liabilities.
Terms and Conditions / Privacy Policy (for online businesses). These documents relate to collecting customer data through your online portal, which must comply with state and federal law, including a privacy policy.
Business Continuity Plan. It’s important to think ahead and develop continuity planning documents that describe how the business will operate during emergencies or if key personnel are unavailable.
Succession Plan / Estate Planning Coordination. Particularly important for family businesses, these documents coordinate with a personal estate plan or trust so ownership transfers smoothly.
Planning for Success with Strategic Partners
Establishing a relationship with the professional team at WKFK Law will set your business on the right path for stability and legal legitimacy in the eyes of the state. Through them, your partnership agreement and other necessary documents will ensure your company grows securely and remains compliant with the law.
