By Kathleen Moore
Working together, people accomplish a lot more than working alone. That’s one reason why people in business form partnerships and other combinations. But business with partners involves risks and decisions that can often lead to disagreements. Here are some ways to help reduce the risk of disputes among business owners, and to make it easier to solve if it happens.
Use a Contract. State the arrangements with your co-owners in a well-written contract. This helps protect against conflicting memories about what was agreed upon.
Get Spousal Consent. If any of the co-owners are married, the agreement should state what happens in the event of divorce or death. Spouses should sign the contract to indicate their agreement to those provisions.
Know the Legal Impact of Your Business Form. The type of legal entity that your company operates as determines whether you are personally liable for the claims and debts of the business.
Record Your Financial Transactions. Keep written records of each partner’s financial transactions involving the company and review these records periodically. Always keep personal property and monies separate from the business.
Act Fairly to Partners. Under the law, partners owe a fiduciary duty to each other. They must act fairly and not deal in ways that would benefit themselves over the business.
Use Mediation to Resolve Disputes. In mediation, the parties meet with a neutral third party. The mediator does not make a binding decisions, but rather tries to negotiate a resolution to the matter that is acceptable to all the parties.
By using these methods, people who work together in a business can help avoid disputes, solve them faster when they do arise, and keep their relationship positive so they can focus on shared goals and making the business prosper.
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