If you’ve decided to enter a joint venture, there are some things that have likely already crossed your mind. Where will your new office be? How many partners do you want? Should you buy yourself a fancy new office chair? The excitement of starting a business with your friend(s) can cause you to overlook some major points in the operating agreement, the legal document that defines the duties and rights of each partner in the company.
This agreement is also pivotal for outlining parameters related to how the company will be ran, and how business will be handled if the company is dismantled. Once you’ve chosen the perfect office chair (treat yourself), you might want to take a look at our list of important things to include in an operating agreement.
- Capital
Every new company requires enough startup capital to get the wheels spinning. Not only should you discuss each person’s initial input, and how that relates to percentage of company ownership, but it’s also important to consider who will foot the bill if the company needs a boost in capitol down the road.
- Death
This clause is an absolute must-have. You should think critically about who you want to take over your portion of the business, and whether or not you’re comfortable with who would take over your partner’s portion. This is the part where any wills and trusts will come into play.
- Partition
Although you and your partner(s) are getting along swimmingly at this point in the business, this might not always be the case. You should have a plan of action for any partners who decide to leave later.
- Individual Salaries
Since each partner is bringing in a unique set of skills and knowledge to the company, you should consider how much all of that knowledge is worth. Is it fair to have equal salaries if one partner has more relevant experience? Should everyone have set profit goals to ensure a steady return on investment? All questions for the beginning of your joint venture.
- Decisions
It’s best to have a set decision making process to fall back on, so that no one feels slighted in the future. If everyone is in conjunction with how decisions are made, everyone is more likely to feel like their ideas are equally considered, which is always great in any sized business.
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