Partnership Agreement Attorneys in California
Knowledgeable lawyers in Pleasanton, CA draft terms for business associations
Great things happen when talented professionals collaborate. But before you rush into business with one or more partners, you must set expectations and safeguard your rights. At Garcia & Gurney, A Law Corporation, our attorneys help clients forge strong and workable partnership agreements. We learn as much as we can about our clients and their prospective business enterprise, so that we can negotiate a detailed agreement that facilitates efficient operations and minimizes the potential for conflict. We draw on decades of experience to provide for contingencies as the business grows and as circumstances change. Our firm serves business clients throughout the Tri-Valley area.
Advantages of forming a partnership for your California business
There are several good reasons to form a business partnership, but there are also caveats. Partnerships have these advantages:
- They facilitate collaboration between people of varied skills and expertise.
- They allow entrepreneurs to share costs, pool capital and improve capacity for credit.
- They increase opportunities to bring in new business.
- They create a support system for running the business.
- They are not taxable entities; each partner’s income is taxed only individually.
On the downside, partners can encounter these issues:
- Disputes over sharing of profits among partners
- Conflicts over operations or about the business’s future
- Conflicts over ownership of intellectual property the business generates
- Partners’ personal liability for business obligations
Whether a partnership is the best form of organization for your enterprise depends on many factors, so you should consult a knowledgeable business formation lawyer before committing to a plan.
Types of business partnerships available in California
There are three basic types of business partnerships:
- General partnership — In this entity, partners divide profits, liabilities and management responsibilities equally or according to specific terms in the partnership agreement. General partners have joint and several liability for the partnership’s obligations.
- Limited partnership — In this structure, there is a least one general partner with full personal liability. Limited partners are liable only to the extent of their contributions. Thus, a 20 percent limited partner can only be held to account for 20 percent of the partnership’s liabilities. Their influence in the business is likewise limited.
- Joint venture — Also known as a strategic partnership, this is an agreement among two or more individuals or entities to serve a short-term goal, such as an investment or a project with a deadline for completion.
An experienced business formation attorney can assess the best entity for your proposed enterprise.
How to establish a partnership by agreement in California
California law requires corporations and limited liability companies (LLCs) to file certain organic documents with the Secretary of State. Partnerships do not have an equivalent filing requirement. However, a partnership agreement is an essential document. It establishes guardrails to keep disputes from interfering with operations and perhaps derailing the enterprise. No matter how amicable your relationship with your prospective partners may be, you need to have a detailed written agreement drafted and reviewed by an experienced attorney.
Key aspects of a partnership agreement
The partnership agreement sets expectations and guidelines for each party’s participation and remuneration. Essential provisions include the following:
- Each partner’s capital contribution
- Each partner’s contribution of business assets
- How the partners will share profits and losses
- General or managing partners’ duties
- Dispute resolution protocols
- Contingencies for a partner exiting or passing away
- Voting rights on key business transactions, such as acquisitions, mergers, contract bidding and assumption of debt
- Governance issues requiring consensus
Each partner should have individual counsel to protect their rights as they negotiate the terms of the partnership agreement.
Contact our Pleasanton business attorneys to protect your partnership rights
Garcia & Gurney, A Law Corporation in Pleasanton, CA advises individuals and companies throughout the Tri-Valley Area in the formation of business entities, including partnerships. For assistance with your matter, call 925-468-0400 or contact us online.
