The Unwritten Agreement

business  venture with at least one other person is the beginning of a partnership formation.   Any verbal agreement may be the basis for the partnership.  If a problem arises, a verbal partnership agreement is difficult to enforce.  What is a partnership may be defined in many forms.  General partnerships and limited partnerships may be verbally formed or have formal written documents.

There are mandatory federal tax filings required for every partnership that is formed.  But often the owners do not realize that a formal partnership has been formed just with a verbal agreement.  So naturally, the required filings do not always happen.  A written agreement between the parties of the partnership is the preferred route for everyone’s protection.  If you are afraid to approach the task alone, legal partnership software is available to guide you through the process for any state.  And if you hit a roadblock, extra help is only a phone call away.

Of all the available types of companies, some partnerships are considered among the  most dangerous ones.  General partnerships have only general partners.  General partners have full liability for each other’s actions in the business.  And the liability includes the use of personal belongings to pay off all business debts.  In a verbal partnership, there is usually no agreement as to the type of partner that each party is.  So a verbal general partnership is something that is not very desirable from a liability point of view.  When a written agreement is executed, some of the partners may be designated as limited partners.  Limited partners are only liable for the total amount invested in the partnership.

What is unwritten may be detrimental to your personal assets when a partner is involved.  A written partnership agreement will certainly go a long way to protect your liability in a joint business venture.