Develop a Limited Business partnership Agreement That Saves Thousands in Litigation
Establishing a Colorado limited partnership for your business carries alot of responsibility and requires a working knowledge of the laws and regulations that apply. When a dispute arises, you want to understand your rights and take appropriate action before things get out of hand.
If you and your business partners do not have a limited partnership agreement in place before you start doing business, you may not be able to handle the problems that will inevitably arise.
Watson & Associates are Colorado business partnership lawyers that understand the day-to-day and legal issues that can arise. We help corporations in various industry groups to develop proactive practices that balance day-to-day goals but still considering the legal obligations of each partner.
Without a limited partnership agreement in place, even minor disputes could escalate into major problems that could end in costly litigation or even up dissolving your partnership.
As a practical matter, if you do not have a partnership agreement in place, you may become subject to the default rules of Colorado partnership law.
Business Parternship Legal Services
- Drafting Services
- Consulting as to Your Rights in a Partnership
- Disputes and Litigation
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- Outside counsel services
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- Business agreements
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- Consulting on day-to-day operations
- Litigation services
Speak with an limited partnership attorney - Call 1-866-601-5518.
Get the Benefit of a Business Partnership Agreement
In its most basic form, a partnership agreement will give you a firm understanding of your business relationship that you have with your partners.
By writing a limited partnership agreement in conjunction with your business partners, you will be able to make an agreement that suits all of your needs.
The partnership agreement will spell out how the business profits will be divided amongst the partners, the rights and responsibilities of the partners, the procedures to take when a partner leaves the business, and many other important rules and guidelines.
Default rules without your agreement in place are known as "The Uniform Partnership Act," or as in the case of Colorado "The Revised Uniform Partnership Act." These laws will spell out the basic legal rules and regulations that apply to partnerships and will be the controlling laws unless you have a partnership agreement in place that supersedes these default rules.
Contents of Your Colorado Limited Business Partnership Agreement
Although there may be other items that you want to include in your partnership agreement, here is a list of some of the most common and prominent items found in Colorado partnership agreements:
- The name of your partnership. If you have not done so already, perhaps one of the first things that you and your partners need to sit down and agree on is the name of the partnership. You can also choose the option of making a fictitious business name. You must register the name with the Colorado Secretary of State. However, if you do decide to use a fictitious business name, you must make sure that the name is available for use and has not already been taken.
- The respective contributions of the partners. When a partnership agreement is written, it is important that all the partners get together and agree on who will be making what contributions to the partnership, and what ownership percentage each partner will be entitled to
- How the profits, losses and draws will be allocated. Your ownership agreement should set out how the profits and losses will be allocated. One of the most popular methods for allocated profits and losses is to go by ownership percentage. Another question that should be answered is whether every partner will be able to take a regular "draw," a withdrawal from his or her allocated profits, each year, or whether the partners can take their entire allocated profits. If you and your partners have different financial needs, there may be disagreements over this part of the agreement.
- The authority of the partners. Without an agreement that is contrary, any decision of a partner can be binding on the entire partnership, even without getting the other partners to agree. If you want to make sure that no one partner can indebt the entire partnership without the agreement of all the other partners, you need to be sure to include this in your partnership agreement.
- Business decision making powers. Like the power to make decisions about debt, it is important that you decide amongst all the partners how important business decisions will be handled. If you do not want one partner to be able to make important business decisions without consent, then you need to make sure to spell out the business making powers of each partner. One popular method is to require a unanimous vote of all the partners for all important business decisions, but still allowing individual partners to make minor business decisions without a formal vote. However, if you decide to take such an approach, you need to be sure to spell out what constitutes an "important" business decision and what constitutes "minor" business decisions.
- Managing. Although it is probably not a great idea to spell out every detail of management in a partnership agreement (meaning you do not have to dictate who will be making the weekly employee schedules), it would probably be a good idea to assign important management duties, such as who will be keeping the books for the business.
- How to bring in new partners. There may come a time in your business when you want to bring in new partners. If you can agree on this process at the outset, it will probably be much easier when the time rolls around.
- How to deal with the withdrawal or death of a partner. Many partnerships have fallen apart when on partner decides to leave, becomes disabled or dies. You should be sure to have a buyout agreement included in your partnership agreement that deals with such situations.
- How to resolve disputes. As it often happens, there will probably be disputes between the partners in your business. However, if you spell out how you will deal with deadlocked disputes at the outset, you can save a lot of money in the future. For example, instead of allowing the partners to go to court, you could require that arbitration or mediation is used first.
If you are in a situation where there is a dispute, our Colorado business partnership law attorneys can advise and represent you if litigation arises. Our goal is to minimize the impact an cost by developing a strong case up front.
Call Our Denver Colorado Business Partnership Lawyers For a Free Initial Consultation - 1-866-601-5518.
If you are operating a Colorado business partnership, contact the Denver business lawyers at Watson & Associates, LLC to draft your partnership agreement. Call 720-941-7200.