{"id":1496,"date":"2018-11-01T07:50:00","date_gmt":"2018-11-01T07:50:00","guid":{"rendered":"https:\/\/www.seedaccounting.com.au\/?p=1496"},"modified":"2022-01-13T06:12:22","modified_gmt":"2022-01-13T06:12:22","slug":"do-you-need-an-agreement-with-your-business-partner","status":"publish","type":"post","link":"https:\/\/www.seedaccounting.com.au\/do-you-need-an-agreement-with-your-business-partner\/","title":{"rendered":"Do you need an agreement with your business partner?"},"content":{"rendered":"\n
Going into new business with other people is exciting and can be extremely rewarding. A formal agreement can set the ground rules and stop owners getting caught out if things don\u2019t quite go as well as planned.<\/p>\n\n\n\n
Whether your business is structured as a partnership or a company, you and your business partners need to agree on the terms of your professional relationship. This will be a partnership agreement, a shareholders\u2019 agreement or, where you are operating a trading trust, a unitholders\u2019 agreement.<\/p>\n\n\n\n
There are many businesses out there that do operate without such an agreement , however if you decide that it would be prudent to have one, the agreement can set out salient points, such as:<\/p>\n\n\n\n
All relationships start with a \u201choneymoon\u201d period where everything looks rosy, and everyone puts in their best efforts to make a combined vision a reality. When partners have their blinkers on to create a business from scratch, they put 100% effort towards a clear common goal.<\/p>\n\n\n\n
This common goal, however, may morph into a different creature for individual partners over time. The once clear common goal can become blurry and takes on a different meaning to different partners. Disagreements can surface about how the firm is being run and future plans for the firm, and these can affect the priorities of the business on a day-to-day basis. It\u2019s difficult enough to gain or just maintain market share in today\u2019s market, so no business owner can afford the time to deal with internal disputes with partners. These disputes are not only time consuming, but are emotionally draining for everyone involved.<\/p>\n\n\n\n
Below are some examples of problems that business owners encounter:<\/p>\n\n\n\n
Without a partnership, shareholders\u2019 or unitholders\u2019 agreement, the parties cannot refer to an agreed way to resolve the dispute. The only option is to apply for a court order to achieve a desired outcome. Court orders can be sought for (and this list is not exhaustive):<\/p>\n\n\n\n
More often than not, parties cannot agree on the way forward and hence any court order obtained will only seem to serve the purpose of one of the parties, rendering the parting of ways less than amicable.<\/p>\n\n\n\n
Needless to say, initiating proceedings in courts involves legal costs to obtain advice, and most important of all, your business is left in limbo while you are sorting out your issues with your business partner who now has more important concerns\/interests than the business that you created together.<\/p>\n\n\n\n
It is invariably the remaining shareholders\/partners\/unitholders who want to continue with the business in such instances who will suffer the most.<\/p>\n\n\n\n
While no-one can anticipate all dispute scenarios that can crop up, it\u2019s always best to have the ground rules set right with your business partners before taking the leap together.<\/p>\n\n\n\n
It is worthwhile spending the time with your potential business partners to discuss at least the following:<\/p>\n\n\n\n
Once the foundation of the professional relationship is laid out, the agreement should be documented and signed by all parties.<\/p>\n\n\n\n
No one wants to think that a partnership will sour or that anyone\u2019s focus will shift from the common goal and doing what\u2019s best for the business.<\/p>\n\n\n\n
However, there\u2019s rarely anything that\u2019s guaranteed in business. Putting an agreement in place straight up could save a lot of time, cost and emotional drain down the track.<\/p>\n","protected":false},"excerpt":{"rendered":"
Going into new business with other people is exciting and can be extremely rewarding. A formal agreement can set the ground rules and stop owners getting caught out if things don\u2019t quite go as well as planned. Whether your business is structured as a partnership or a company, you and your business partners need to […]<\/p>\n","protected":false},"author":2,"featured_media":1537,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/posts\/1496"}],"collection":[{"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/comments?post=1496"}],"version-history":[{"count":0,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/posts\/1496\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/media\/1537"}],"wp:attachment":[{"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/media?parent=1496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/categories?post=1496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.seedaccounting.com.au\/wp-json\/wp\/v2\/tags?post=1496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}