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Forming a partnership on purpose

On Behalf of | May 14, 2022 | Business Law

As you get ready to start a new business, a friend or colleague can be essential to building your company and your motivation to keep going. While you may intend your work together to be temporary, the person you are working with may have a different idea.

In some cases, what starts as a collaboration on a business can turn into an unintended partnership. When a partnership goes from helpful to disruptive, it can mean significant challenges for your new business.

Here’s what you should know about including a partner and how you can make your partnership purposeful.

What can go wrong with an accidental partnership?

As you are getting started, it can be helpful for your colleague to support your business since it can save you time and money. While they are accomplishing tasks you agree with; the accidental partnership works in your favor.

However, it can create problems if they start acting on behalf of your business in ways you do not authorize. When someone who formerly worked under your authority makes unauthorized decisions, the accidental partnership can put you at risk.

Creating official boundaries

When you and your colleague are getting started, you should create clear boundaries for what types of decisions your partner can make and what authority they have without your direct authorization. If you are expressly not forming a partnership, you should create documentation that explains your colleague’s role.

A partnership agreement

When you decide to bring on a partner, you should make sure you both know what to expect from each other and the expectations of the partnership. While you may not be thinking about a potential problem, you should also have an agreement that explains what happens when one or both of you want to dissolve the partnership.

A partner can be an excellent way to build and support your business. You should make sure you are clear with your collaborators about what kind of relationship you have and their continued role with your business.