The first step is to decide what form of business you should create. This will help to protect your personal assets from exposure to liability for the obligations of the business. In most states, the most common choices are partnership, corporation or limited liability company (LLC). A business attorney experienced in forming business entities and your accountant can help you decide what type of organization best fits the needs of your business.
You should always have a written agreement between or among you and your co-owners. That agreement will take the form of a Partnership Agreement, LLC Operating Agreement, or Shareholders Agreement, depending upon the type of business entity you choose to form. The agreement will govern all aspects of the relationship between or among the owners of the business. Because no two businesses are alike, your agreement should be custom drafted by a business attorney experienced in drafting such agreements.
Although it is impossible to anticipate every issue that will arise during the life of a business, the issues discussed below occur so regularly as to be predictable, which is why these basic provisions should be in every business ownership agreement.
About the Author: Phil Kirchner is a member of Flaster Greenberg’s Litigation Department and a former managing shareholder of the firm and past chair of its Litigation Department.
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