Customized Partnership Agreements to Meet Specific New York Business Needs
A partnership agreement serves many purposes. It gives you a playbook for how to operate your business. It also tells you how you will add or remove partners. Finally, it should explain how you will deal with a partnership dispute.
Partnership agreements are infinitely customizable. You can include anything you and your partners desire as long as it does not violate U.S. laws, New York State laws, or public policy. Your business can have a partnership agreement tailored to your specific needs regarding the creation, operation, and dissolution of your business partnership.
For example, the partnership agreement can address how your business venture handles:
- Capital contributions by partners;
- Ownership percentages;
- Distribution of profits;
- Voting rights;
- Each partner's responsibilities and obligations.
Most partnerships have unique terms to meet the unique needs of the partners.
Understanding Partnership Agreements in New York
A partnership is an association of people for a purpose. A partnership agreement is a contract that binds partners together. It serves as the foundation for the partnership.
In its simplest form, the agreement memorializes the fact that the partners agree to work together. But a standard partnership agreement will also set out the obligations and responsibilities of each partner to the partnership as well as the benefits each partner will get from it.
How We Can Help with New York Partnership Agreements
Lawyer For Business can represent an individual partner or, with the appropriate waivers, the entire partnership. We will discuss the partners' needs and goals and fight for an agreement that fairly represents our client's interests. Some issues we handle include:
Drafting and Reviewing Partnership Agreements
Lawyer For Business has an experienced attorney to draft partnership agreements. We can also review partnership agreements prepared by other partners and their lawyers. In either case, our purpose is to make sure the partnership agreement matches the deal points negotiated by the partners and has been written clearly and unambiguously.
Partnership Dissolution and Exit Strategies
One of the most complex and poorly understood terms of a partnership agreement is the dissolution process.
The partners should not fear this process because it can open doors to:
- Eliminating a problem partner;
- Changing the business entity;
- Selling or merging the business.
Lawyer For Business advises partners and partnerships on how to structure a flexible dissolution process.
Partnership Amendments and Modifications
Your partnership may need to amend or modify its partnership agreement. Sometimes this happens to resolve disputes among the partners. Other times, this happens when the partnership wants to take on a new business venture, such as merging with another business. Lawyer For Business tries to define a flexible amendment process that satisfies the partners' goals for the partnership.
Compliance with New York Partnership Laws
Compliance is a critical issue for partnerships. If a partnership fails to comply with New York partnership laws, a court can disregard the partners' intent and lay the partnership's liabilities on their shoulders. In a general partnership, this might have only a minor effect. But for a limited partnership, limited liability for some partners is a key factor.
Partner Buyout and Buy-Sell Agreements
When a partner wants to leave, you generally want to give them that option. A partnership does not function with unwilling and non-cooperative partners. Typically, you will use a buy-sell agreement where the remaining partners have the first right to buy the existing partner's share. If the partners do not, the exiting partner can sell to an outside party. A solid buy-sell agreement can also ensure one partner does not end up being stuck in business with a partner’s ex-spouse in the event of marital dissolution, or with a partner’s beneficiaries in the event of death or incapacity.
Why Trust Your Partnership Agreement to a Lawyer For Business?
Getting operating agreements out of a forms book can often leave you exposed to risks. Lawyer For Business helps your partnership operate smoothly and resolve disputes before they happen.
Some benefits of hiring Lawyer For Business include:
We can help your business hit the ground running with a partnership agreement.
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Protect your business and relationships with tailored partnership agreements. Consult our Partnership Agreement Lawyers for success.
Benefits of Partnership Agreements
A partnership begins when the partners agree to create it and operate as if they are partners. In theory, this is all you need from a partnership agreement. But there are benefits to creating a more comprehensive document for your business partnership.
These benefits include:
- Avoiding misunderstandings that come from oral agreements;
- Documenting the terms on which the partners agreed;
- Providing documentation to the IRS and other taxing authorities that a partnership was created;
- Minimizing partnership disputes over the terms of the partnership;
- Setting out rules for adding and removing partners.
All of these benefits come from negotiating openly among the partners, memorializing in writing the terms agreed upon by the partners, and obtaining the partners' assent to the terms in the form of a signature.
Key Elements and Provisions Included in Partnership Agreements
Any time you associate with other partners to form a business venture, you should have a written agreement that sets out as much of the company's operations as possible. You want to avoid partnership disputes after you have already started doing business. Waiting to work out how the business will operate will inevitably lead to disagreements.
Some terms to include in your partnership agreement include:
- Ownership percentage;
- Financial terms;
- Process for admitting new partners and removing existing partners;
- Decision-making and control;
- Process to resolve partnership disputes;
- Amendments to the partnership agreement;
- Dissolution of the partnership.
One of the benefits of partnership is that you can structure ownership in any way acceptable to the partners. In other words, partners do not need to own equal partnership shares. You can set out the share owned by each partner in the agreement.
Financial terms will cover a range of issues, including:
- The initial amount of capital each partner contributed and the method to call for additional capital;
- The services contributed by each partner;
- The process for distributing profits and losses.
Admitting and removing members can run into sticky issues. When you admit a new partner, you typically need to address whether the existing partners will have their shares diluted.
Another common issue you should address is the division of labor. Partners often go into business with the best intentions. But once the time and labor commitments begin to pile up, they might need to be reminded of their responsibilities and obligations.
Experience working with partnerships; unique insights into how a partnership dispute starts and how to resolve it;
Skill in negotiating with partners to protect our client's interests while ensuring they do not interfere with the partnership;
Knowledge of many partnership agreements to draw on when customizing your agreement.
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Contact Your Partnership Agreement Lawyers
Contact Lawyer For Business using our contact form to schedule a consultation to discuss your business partnership and its partnership agreement.
FAQs
Do I need a written partnership agreement in New York, or can it be oral?
Partners can deliberately or inadvertently create a partnership through an oral agreement. There is nothing wrong with forming business partnerships orally. But if one partner starts a partnership dispute, you could face expensive litigation to determine what was promised.
Can a partnership agreement be modified or amended after it is initially signed?
Yes, partnerships can amend or modify their agreement after it gets signed. The agreement often includes a formal process for adopting modifications or amendments. Typically, you will take a vote of the partners. One partner cannot unilaterally change the agreement.
Can a partnership agreement address the admission of new partners or the withdrawal of existing partners?
Yes, you want your agreement to address adding or removing partners. Without an agreed-upon process, the partnership will lack control over who joins the partnership through admission or buying an existing partner's share.
What happens if there is no partnership agreement in place in a New York partnership?
There are two risks when you have no partnership agreement. The first is that a court could look for any oral promises or the partnership's customs to determine how the business should be run. The second is that a court could use the default mode of operation from New York law or even English common law.
How does liability work for partners in a New York partnership, and how can a partnership agreement protect against personal liability?
General partnerships do not protect partners from personal liability for any company liabilities and debts. Limited liability partnerships (LLPs) can protect limited partners from personal liability. However, an LLP requires registration with the state and at least one general partner.