When going into business and taking on a partner, it’s a fantastic idea to have a contract/agreement to find out the share of the company you each own. It also lets you display and agree on what each of you will contribute, in addition to protecting both of your interests when working together.
You may be asking yourself now, how to what makes a good contract? Well it is truly simple. First thing to do is to be clear on every facet of the company. What is you may want to make clear are:
1. How much each of you may spend. – This will show what both of you are contributing to the business as well because it will help determine who have what% of the company.
2. When and when payback happens. – Pay back is significance paying back the initial investment with a spouse. Payment must only come if the investor won’t have any part of the business when he’s repaid in full(and a bit extra for being an investor). If they are to remain part owner of the business then they ought to regain their losses through the revenue generated by the company.
3. Who will over see operations of the company. – This is important so you are clear on who will take care of the day to day issues of the business, like dealing with the customers etc.. .
4. Who owns what percentage(%) of the provider. – This is a really important part because when decisions need to be made, there needs to be a clear vision on who has the last say. That is usually who has the significant share in the business, so it’s better to not go 50/50 when entering into an agreement, in the most you need to go 51/49 at least.
5. Buy out/selling clause. – In case one spouse should leave the company there should be an option to buy out or sell off their percentage. This should be agreed on by both spouses.
Another significant part a contract is to have both spouses sign it, together with a watch for each side to sign the contract. This gives an extra system of protection once the contract needs to be changed or enforced because there are witnesses that could vouch for each facet.
There are quite a few different exemptions you can add to a contract to protect yourselves, just be certain that there is an agreement signed by both sides prior to getting into business together. It’ll save you allot of headaches and protect your interest in addition to your business!