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2 important rules for partnership or LLC disputes

| Mar 5, 2021 | Business Formation & Planning |

When two people go into business together, they usually realize that they are able to draw on each other’s strengths to make the company the best it can be. Many business partners start out with the mistaken belief that their is no issue that they can’t easily resolve together, but even the best-planned partnership can fall prey to unexpected disputes or that they disagree about matters that they didn’t think about before starting in business together.

It’s best to set up a plan for dispute resolution before one occurs. This gives you and your partner a chance to come to terms about how you want to see a dispute settled before there’s a situation that suddenly explodes. Like most business matters it is important to plan for unexpected events so that should such an event occur there is already a plan in effect.  Working with an experienced business attorney can help ask the correct questions to understand the issues and most importantly can help people planning to go into business to decide that their differences won’t become an issue and understand that BEFORE investing a lot of time and money in a new business venture.

That being said, there are two important rules to remember whenever you and your business partner are in conflict:

1. Keep your partnership disputes out of the office

One mistake that some partners make is trying to hash out a solution while they’re actually in the office in front of their employees. This can make the employees uncomfortable, bring down morale, and harm the company.

Instead, you and your partner should discuss the matter behind closed doors. This may mean meeting away from the business, working with a mediator or something else. Learn to compartmentalize things so that you keep your head on business when it’s time. 

2. Be willing to listen to your partner respectfully

Both partners had something to bring to the table when you started the business. When there’s a dispute, remembering your business partner’s strengths can help. Listen to each other and think carefully about the solution the person who has the most experience in that area offers. Compromise can help to resolve these matters effectively.

If there’s a partnership disagreement that you can’t resolve on your own, you may have to turn to other options like mediation. If there are serious matters at stake, such as monetary issues or fraud, you may need to take legal action. Be sure to contact your attorney if you think this might be necessary, or better do it before you start in business.