As established contractual relationships, Illinois partnerships can be difficult to untangle when things go wrong. When people are preparing to go into business with one another, it is important to take steps to avoid potentially costly errors if the partnership breaks down.
One of the biggest mistakes people make when establishing partnerships is not discussing their individual perspectives on compensation. Disagreements can then arise if one partner is expecting to be compensated in a different way than the other partner believes to be best for the business.
Prospective business partners may be able to prevent financial infidelity by conducting comprehensive financial background checks. For example, a person may want to avoid going into business with a partner who has tax liens, judgments, poor credit scores or bankruptcies on their record. Establishing a system of checks and balances, such as by regularly using the services of an auditor and requiring two signatures on any business check that is written, is a good idea as well. Limits may also be placed on the amount of withdrawals that can be made from the venture’s accounts.
When people are considering forming a partnership, conducting careful planning during formation can be helpful. People may find it beneficial to seek the advice of a business law attorney, as that attorney might help clients draft partnership agreements and business plans as well as conduct background checks. A business attorney may further help by registering the legal structure of the venture with the state. People may also use the business law attorney’s services on an ongoing basis, as an attorney may consult and provide guidance as needed to help ensure the venture’s success.