When you meet someone else and decide to work together, starting a new business, it’s easy to think you can just shake hands and get started. You’re both on the same page, right? You both want to succeed.

It may feel that way, but the reality is that you should create a partnership agreement. You want this joint venture to be well-defined from a legal perspective. You never really know what the future holds. If things go south, you don’t want to spend time in court arguing about who said what or what you agreed to at the beginning. You want those things to be written down in black and white so that there is no question.

What should a partnership agreement contain? A few things you may want to touch on include:

  • How long the partnership will continue if you want to put an end date on it. Even if you don’t, it can be wise to specify that it does not automatically terminate.
  • What percentage of this new company both of you are going to own? A 50/50 split should not just be assumed.
  • How you are going to get paid or divide up the money that the company earns. Do you split up everything between the two of you? Does the company keep all of the earnings, and you draw a salary?
  • What authority the two of you have, what duties you’ll take on and what obligations you have.

This is not everything you want to address, but it’s a good place to begin. Make sure you know what steps to take and that you carefully consider what your agreement needs to state.