A partnership business will not take off unless all partners have a clear vision and well communicated responsibilities. To build a strong foundation from the start ask yourself these questions:

Is there a balance of talent among all partners? A business should have a broad mingling of talents from a small number of individuals who wear multiple hats. Each partners should have strengths that others lack in creativity, finance, technology, management, marketing, and so on.

What do you bring and how is it measured? Everyone needs to agree on the value of each partner’s contribution and the collective contribution of all partners is vital for success. Example, does one partner provide personal savings for startup capital while other partners bring on an existing book of customers from a previous business? If expectations are clear and known by all then common understanding of ownership, politics, economics, operations and other related issues will lay the foundation for a mutually beneficial relationship.

What is the commitment level? Before any legal entity can begin , the partners must first gauge the level of commitment that each member possesses. Are there individual commitments that might conflict with that of the partnership, if so then what will be the discussion, action, and result? There will always be competing commitments so the wise course of action is to plan for the evolving commitment levels of each partner so as to have a fair and common understanding of what is to be expected.

Have all important issues been discussed? All relationships depend upon transparency and completeness. Code of conduct for this requirement should be for all partners to iteratively bring any issues to the table for discussion - especially while the business is forming.

Is there sufficient funding? Who can overlook the importance of funding? The one thing to stress here is to clear up any ambiguities. The budget should outline as precisely as possible, how much, from where, for how long, etc… The business must be able to withstand a duration of loss as well as profits.

How will decisions be made? There are many combinations of decision making situations that arise in any business. Partnerships especially should have a clear and concise policy for decision making so as to avoid confusion during the course of operations and important transactions. Are issues decided jointly, will one partner be responsible for the final decision, are there percentages of decision weight depending upon seniority, is there a right to veto, and so on...

What happens if a partner leaves? The partnership must decide what to do regarding ownership. Is ownership forfeited, will there be a buyout, does it transfer, what are all the terms and provisions? Partners should plan ahead for this change in circumstance, because disputes happen, so do life changes, and even adverse misconduct.

WHAT TYPE OF LEGAL ENTITY SHOULD BE FORMED AND HOW WILL OPERATING QUESTIONS BE ADDRESS?
First, you will need to decide if a Partnership, Limited Liability Company or Corporation is the best entiry for your needs. To protect personal assets it is wise to form a legal entity as soon as possible so that a clear line is drawn between the business identity and personal identity. Along with the formation of your entity, you will need to put in place an agreement that will clearly define the duties and responsibilities of each member, shareholder or partner for your Limited Liability Company, Corporation or Partnership. An Operating Agreement, Shareholders Restrictive Agreement or Partnership Agreement would cover all of the above plus:

The relative authority, roles, and responsibilities of the partners , members or shareholders
Their initial contributions to the business and percentage ownership
Economic rights relative to the cash, profits, and loss of the venture
Governance and a frame work for the settlement of disputes between members, shareholders and partners
Exit rights and buyout obligations
As a new entrepreneur, you are going to invest a lot of time and money into your business. It is imperative that you protect yourself and your business from anything that could go wrong. One of the keys to being a successful entrepreneur is proactively planning for the worst situation, not reacting to the situation after it has happened.