Often, when forming a new partnership in business, the excitement of a new business leads to partners putting off establishing the correct documentation to define the business relationship. As with many relationships, it can be tricky to know when to define things officially in a business partnership. However, the sooner that key responsibilities and outcomes are defined with well-crafted documents, the greater likelihood the partnership has of avoiding uncomfortable and costly problems that may arise down the road.
It is easy to understand why a freshly founded business may want to delay crafting documents to define key relationships and roles. When everyone involved in a new business is filled with enthusiasm, it may seem feel like defining terms and responsibilities for the few present members of the business will throw a wet blanket on the thrilling experience of getting a company up and running. However, any loss of momentum felt by taking the time to make official incorporation papers and defining the roles of each member of the team is almost always better than the problems that can arise from leaving these things vague and undefined.
Partnership and incorporation documents do the important work of laying out a plan for how to handle any number of surprises and changes that can become huge problems if not planned for ahead of time. Should a principle member of the business leave the company or pass away, having a plan in place for how to address these events fairly with a buyout option can preemptively avoid bad blood between members in a partnership. If the business closes indefinitely, there may be assets which the principle members of the partnership will need to sell or otherwise distribute. Predetermining how these assets will be divided can spare hurt feelings when the time comes.
Whether a business partnership is forming or attempting to make up for lost time by creating long-overdue documents to get a business headed in the right direction, proper incorporation documents can protect the interests and rights of every member of a partnership. The assistance of an experienced legal professional can guide partners through this process and help them reach fair and equitable terms.