Going into business with a like-minded entrepreneur sounds like a recipe for financial success. However, there exists a risk of one business owner trying to wrest control from the other.
Fortunately, preventative measures are in place to protect your stake in a proprietorship. Whether you are planning to start a business, or are already engaged in a partnership, you can become informed on what to do if your partner attempts to push you out of the business.
Refer to written agreements
When starting a business, owners may file certain written agreements that outline the terms of conduct and bind the signees to uphold them. The U.S. Small Business Administration defines an operating agreement as a document that outlines financial and functional decisions as well as rules, regulations and provisions. In the absence of an operating agreement, a shareholder’s agreement might also serve to protect you from pushout by a partner.
Refer to state regulations
Many small businesses form without the filing of written agreements. Even in such a case, business members are still protected by rules enforced by state law. Becoming familiar with local and federal laws will help ensure that you are not violating any rules that would allow a hostile partner to force you out of the business.
While written agreements and state regulations can protect your place in a business partnership, there are still circumstances in which courts can force a dissolution of your company. In the event of a dispute with a business partner, a business law attorney can help you protect your financial and professional assets.