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How can you avoid a partnership dispute?

A partnership can be a great business structure to utilize if you want to retain control over your company and decrease taxation. It can also be a good way to raise capital and bring unique experience into your business.

Yet, many of these businesses end up facing partnership disputes when owners disagree over operations, duties, and profit-sharing. If you’re not careful, then one of these disputes could have a profoundly negative impact on your business, in some instances even leading to dissolution.

What can you do to avoid a partnership dispute?

Fortunately, there are steps you can take to reduce the risk of being embroiled in an intense partnership dispute. This includes doing the following:

  • Creating a written partnership agreement that clearly defines each partner’s obligations and responsibilities.
  • Discussing values with potential partners to ensure that their vision of the future aligns with yours.
  • Talking about worst case scenarios so that you know what to expect from the other partners when things go wrong.
  • Creating a decision matrix so that difficult decisions can be made in a fair and objective fashion.
  • Communicating regularly with your partners so that you can hash out any disagreements before they fester into something more severe.
  • Seeking outside help through something like mediation so that you can head off any potential disputes before they come to a head.

Address your business issues comprehensively

A poorly created partnership puts you at risk on many levels. You don’t want to jeopardize the future of your business and your earnings. That’s why you have to carefully navigate your business formation and any legal issues that may arise once your business is up and running. By being diligent, though, you can protect your interests and build the future that you envision for your business.