Before you start a partnership at your service station, there are some details and documents that you’ll need to get in order.
Having all the correct documents in place before beginning a partnership is essential. This is because documenting everything surrounding the legality of your partnership will protect you from a number of dangers down the road.
A Partnership: What Is It?
A partnership is a type of business structure managed by two or more people who agree on the common purpose of the business. Between these people, the responsibilities of the business, along with the income and losses, are shared. If your service station runs into trouble, both (or all) partners will be liable.
Partners may be responsible for:
- Buying/selling property
- Entering into contracts
- Paying damages
- Repaying debts
There are three types of business partnerships: normal, limited, and incorporated limited partnerships. The difference between these three types is the amount of liability assumed by the partners.
Documents You Need
There are a handful of documents you need in order to begin a partnership set for success. These documents include:
- Partnership Agreement
This is a legally binding document that lists the responsibilities, obligations, and expectations of each partner. It includes information surrounding how income and losses will be distributed, each partner’s investment, the goals/objectives of the business, regulations and conduct, policy on adding more partners, the decision-making process, and how to handle a partner leaving the business.
- Dissolution of Partnership Deed
This document signifies the end of a partnership and frees all parties from liability. It will address asset division and the termination date of the partnership. It will also include the liquidation of assets and the partners’ conduct post-dissolution.
- Memorandum of Understanding
This document details the intentions of each partner and lays out the terms informally before a legally-binding contract is put in place.
- Employment Contract
This document is what informs employees of their duties and their rights within the business. Employee contracts tend to differ for each type of employee.
- Profit Share Agreement
This document determines how the partners will split the profits of the business, and it’s very important to put it in writing.
Creating A Partnership
When creating a partnership at your service station, there are plenty of details to keep in mind. Because of this, it’s always smart to have a legal professional on your side during the process. If you need any help or advice, make sure you contact us.