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You could get into a dispute with your business partner

On Behalf of | May 25, 2022 | Business Law |

Business partnerships are very common in the United States, and they can be very successful. Often, two people complement each other well and provide the necessary skills so that the business can thrive. This is why a business with two partners can be more robust than a sole proprietorship.

But there are also some risks you take on when you start a business partnership. One of these risks is that you and the other business partner may wind up engaged in a serious dispute. In some cases, this is so serious that it threatens the very viability of the company and could cause you to have to close your doors.

Why do disputes happen?

Disputes can happen for many reasons, but they often just revolve around two people not seeing the situation the same way.

For instance, maybe you are trying to provide the best possible product to the consumer, regardless of the complexity or the cost. Your business partner, on the other hand, is trying to keep the costs as low as possible. They are worried that you are spending far too much of the company’s money, while you are worried that they’re creating an inferior product that will harm your brand.

These disputes could also involve some of the ways in which the company is run. Maybe your partner believes that you should take all of the revenue for the year and just divide it in half. But you believe that each of you should draw a salary and any extra money that you make beyond that should be put back into the company. These are very different financial positions, so you can imagine how having different opinions can be very problematic.

What can you do?

The first way to address this is simply by starting your business with a partnership agreement. You can then talk about some of these key points and make decisions in the beginning, such as dividing up your roles within the company or determining how much money each of you will earn.

But if that’s not enough to stop a dispute, then you may need to look into all of your other legal options. They are usually ways to resolve the dispute or to determine what the future for the company is going to look like.