Friday, July 11, 2008

Against All Odds Of Partnership Breach

Partnership is a business undertaking for purposes of dividing profits among partners.

No formal understanding or agreement is required to its existence. However, sound business practice dictates that agreement on at least the basic provisions must be laid down clearly.

Fundamental partnership agreements on allocation of profits or losses, costs, obligation and liabilities of the partners must be addressed.

The foregoing pieces of information are necessary in case of dissolution or breach of partnership responsibilities.

There are various steps in formalizing a partnership agreement, from choosing a name to determining tax liability In the end, you will realize the worth of having to go through such processes than not to have at all.

In business, misunderstandings occur often and if responsibilities and liabilities of the partners were not clearly delineated, there would be chaos.

How many friendships have ended because of failed business partnership? I say, countless.

Oftentimes, small partnership problems may escalate into a big one causing some partners to back out. It is at this stage that agreements embodied in “black and white” can be of great help.

In short, document all matters involving your business from start to finish. If the day comes that you need to justify certain decision, you will want written documentation to support it.