Before starting a partnership, what do owners need to agree upon?

Before starting a partnership, it is essential for the owners to agree upon a detailed contract outlining responsibilities and profit sharing. This contract, often referred to as a partnership agreement, is crucial as it sets clear expectations and guidelines for each partner's role within the business. By documenting the specifics of responsibilities, decision-making processes, and how profits and losses will be shared, partners can help prevent misunderstandings and conflicts in the future. This agreement serves as a legal framework that can protect the interests of all parties involved, ensuring that each partner knows their obligations and rights from the outset.

While other elements like a financial audit plan, an employee handbook, and a marketing strategy are important for the overall operation and strategy of the business, they are secondary to the foundational agreement needed to define the partnership itself. Without the clarity provided by a detailed partnership agreement, partners may encounter significant issues that could jeopardize the success of the business in the long term.