The negative impact a partnership dispute has on a business is huge. Typically, when a partnership dispute occurs at a smaller business, the impact is greater than with a larger partnership. Often times this leads to tense working conditions and ultimately the demise of the business.
How can business partners in Iowa prepare for issues ahead of time?
Business partners should have a thorough and detailed partnership agreement established prior to any questionable situations that arise. This should be a formal, written agreement that maps out the profit sharing and other parameters of the business agreement. An experienced Iowa business attorney would be helpful in the drafting of the contract.
Why do disputes between business partners occur?
There are times when business partners do not agree on the path that their business is taking, which results in a dispute. There are generally four main reasons why business partnership disputes in Iowa occur:
Financial issues - This can result from one partner taking too much cash out of the business, or both partners having different financial needs. The financial aspect is the most difficult part of a partnership and needs to be managed and planned out carefully.
Profit sharing arrangements - This can result because one partner is unhappy with the other partner's input into the business (or lack thereof), and he does not feel that the profits should be shared equally.
One partner wants out - When one partner wants to leave the business, the details surrounding this departure could be messy and can cause complications.
Other factors - There are other external factors such as a partner having a long-term illness, marriage problem (going through a divorce), or financial problem that can lead to a business partnership dispute.
Because partnership disputes can be messy, it is beneficial for business partners to agree in advance how these situations should be dealt with. Seek the advice of an Iowa business litigation attorney prior to starting a business by contacting the law firm of Brady Preston Gronlund at (319) 866-9277 today.