Prenuptial agreements have become popular with Georgia couples because they set out certain rules and safeguards for both during the marriage and if it ends in divorce. Considering what is at stake in business formation, the partners starting the business may want to take a page from newly engaged couples and have their own agreement before going forward. The agreement could outline many of the provisions normally found in a formal business operating agreement, but it may also include some additional assurances should a party not follow through with his or her promises as the business evolves from an idea to reality.
When starting a business with a partner, both parties generally bring different skills to the table. Each party relies on the other to use those strengths to further the business. Often, if even one piece of the puzzle is out-of-place, it can adversely affect the business.
If the parties negotiate a pre-formation agreement, the expectations of both parties can be outlined with as much specificity as is desired. Further, the agreement can include any possible consequences that would be applicable if one party to the contract fails to perform as promised. This could serve as an incentive for the parties to do their best to make the business succeed.
Many Georgia residents have good ideas and high expectations for a new business. However, once they get into the minutia surrounding business formation, it can seem overwhelming. Thinking about many of these issues beforehand and putting any agreement with a partner in writing before setting off on this new adventure could provide both parties with some peace of mind.
Source: madamenoire.com, “Starting A Business Partnership? Learn About Pre-Formation Agreements“, Tonya Garcia, April 11, 2014
