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Partnership and Operating Agreements: Why You Need One

Starting a new business is an exciting venture, but partnerships can be difficult to Business Law Attorneymaintain without the proper foundation. A partnership or operating agreement is an essential business document for any new venture involving multiple individuals. Agreeing on expectations and obligations at the onset of a business relationship is crucial to a lasting, positive partnership. Drafting partnership and operating agreements forces the parties to have these conversations and come to an understanding about how certain potential problems will be handled. Attorney Marisa Portuondo has both educational and real world business experience.  She offers a full complement of legal services designed to get businesses started with their best foot forward.  She can also help you determine whether a partnership or an operating agreement is the appropriate document essential to your business.


Partnership and operating agreements can document how much each partner invests in the business. While this does include money, it is not limited to money. For example, one partner may provide the building for the business.  Another partner may contribute special equipment needed for the business. Or one partner may contribute capital while another contributes sweat equity. These investments can and should be itemized and memorialized in your agreement.  This crucial document can prevent litigation down the road when disagreements occur.

Division of Labor

While it may seem like the easiest solution, a business cannot realistically succeed when all partners are equally responsible for all tasks. Instead, the partners should discuss and decide how they plan on allocating obligations and control. Will one person be responsible for the front of the house for a new restaurant, while the other partner takes on the responsibilities of the back of the house? Perhaps one partner will run the business while the other partner does not take an active role. There is no “right way” to allocate responsibilities. However, failing to discuss, consider, agree upon, and document the division of labor could lead to disastrous consequences.


Different people have different ideas about the best way to handle business finances.  Will you re-invest the profits directly into the business?  Will the partners draw a salary? What is the tax status of the business? Who may draw on the line of credit? Under what circumstances? A properly prepared agreement addresses all of these issues.  Detailing financial decisions in the beginning reduces the potential for disagreement later.

Anticipating the Future

Disagreements about handling challenges associated with a business are inevitable. Deciding ahead of time how partners will work out disagreements prevents resentment and arguments later. Even in the best of partnerships, disagreements are inevitable. This is where a well-written partnership or operating agreement really shines. At the first sign of a disagreement, the partners can simply refer to their agreement, as it memorializes their agreed-upon expectations and obligations, preventing the escalation of issues.

Additionally, if the parties wish to expand the business by adding another partner, their agreement will detail the process.  Finally, should a partner wish to leave the business, or should the business need to be dissolved, these agreements delineate the process, ensuring a smooth winding up of all details.

If You are Starting a Business

When starting a business, there are dozens of tasks requiring your attention.  Let Portuondo Law Firm carry some of the load. From partnership and operating agreements to articles of incorporation, non-compete agreements to operating agreements, Portuondo Law Firm has the experience you need to draft the documents necessary to protect you and your business. Contact us today to discuss your business needs.




The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters, and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send us any documents to review or confidential information until such time as an attorney-client relationship has been established.

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Marisa Portuondo

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