Posts Tagged ‘Partnership agreements’
This week I once again heard a story about a person in a partnership with 2 other people who is getting the short end of the stick. This person is putting up the labour and equipment but not reaping any of the rewards and has no signing authority over the funds of the partnership.
Anytime you are entering a business arrangement with family or friends, it is critical to have a partnership agreement that details every party’s role and responsibility in the partnership. The article Creating a Partnership Agreement provides good guidance on what you need to consider when developing a partnership agreement.
Even though you may have a proper agreement in place it is meaningless unless it is followed and enforced. There must be proper controls in place to ensure that the agreement is being followed and that each partner involved is protected.
You must also have proper bookkeeping in place to track the transactions and above all else NEVER give up signing authority over the funds. You must be the one to sign the cheques so that you know exactly where the funds are being paid. It would be best if both signatures were required on cheques so that neither party had total control over the funds of the partnership.