Paula Lines, director at The Law Shop, explains that creating the partnership or shareholders agreement and setting up the proper structure for the partnership are the two most important steps in the process. She says it’s about understanding the mechanics of how your business will be governed, in every possible scenario.
“The agreement will cover things such as the nature of the business, so neither of you decides to head off on another track without agreement, contributions of capital, the responsibilities of each owner so everyone is clear on who will do what, what will happen if one of you gets sick and is unable to work, or you have a falling out and don’t want to work together anymore,” Paula says.
Most of the time, people see a lawyer when things go wrong and they need help sorting out the problems. By this time, the parties are already thick into their dispute, often angry or hurt, and unwilling to compromise. Both stand to lose money, and more often than not it becomes a matter of principle to keep arguing. Getting legal help at this stage is good, but much too late.
If you see a lawyer at the beginning and get a solid partnership agreement in place, you can save yourselves money and heartache in the long run. The agreement will allow for revisions due to changing circumstances, but these should always be in writing and signed by each party. There will also be clear rules in place on how to end the business relationship and an exit strategy, so neither party is disadvantaged when the relationship comes to an end.
If you are looking at going into business with another person, talk to the team at The Law Shop first. They know the ins and outs of all aspects of business law and can assist you at any time of your entrepreneurial journey. Contact their Rotorua or Tauranga office if you need practical and professional legal advice for your business, especially if you prefer a no-nonsense approach. Just send an email to email@example.com to get things started.
Over the holiday period, The Law Shop’s offices will be closed between Friday 21 December 2018 and Wednesday 9 January 2019. Paula and her team hope you’ll get a chance to enjoy some free time over the Christmas and New Year’s period to spend with family and friends, and that 2019 will be the best year yet for you and your business.