Ten Considerations To Make When Forming a Business With a Partner

When you are forming a business partnership or an LLC, you’ll want to consider the following concerning the business agreement between you and your partner.

  1. How will ownership of the business be divided?
  2. How much capital or property should each partner contribute to the business?
  3. What will happen if a partner doesn’t fulfill their contribution requirements?
  4. How will major business decisions be voted on? Do you want to require a meeting to approve major business decisions or is written consent sufficient?
  5. Do you want to plan for the addition of additional partners? What procedures and requirements must be followed to add additional partners?
  6. What will happen if the business needs to raise more capital?
  7. Do you want to allow or prohibit a partner from transferring or selling their interest in the business?
  8. What happens if the partner wants to leave the business? Will it trigger the additional partners purchasing the partner’s interest? How will their interest be valued?
  9. How will the partners be compensated? Will the partners receive a salary? How often will distributions be made? Will distributions be made during regular intervals or will a vote be required to make a distribution? What procedures or requirements must be fulfilled to make a distribution?
  10. Do you want the partners to be able to withdraw funds form the LLC without a distribution being made through a “draw account?”

If you’re looking to form your own business in Pennsylvania, call me at (484) 362-9286 for a consultation.

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