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What can cause partnership disputes?

On Behalf of | Oct 14, 2022 | Business & Commercial Litigation |

There are many different types of businesses in Georgia. These businesses are set up to do different types of work and they have different business structures based on the needs of the company. Some of the common business structures are limited liability companies and corporations. However, for many professionals, partnerships can be a good business structure.

Partnerships are set up for the partners to split the profits and debts of the company either equally or in other ways. There is an expectation that each partner will do their job and carry their weight. This may not always occur though or there may be a perceptions that one partner is doing most of the work or is more important for the company and, therefore, deserves more of the profits.

Common causes of partnership disputes

This type of dynamic can lead to partnership disputes. Some of the common reasons for partnership disputes include:

  • The partnership is between family members and friends and the personal relationships affect the business or vice versa.
  • One partner is working harder than the other or producing more for the company. This can also occur if one partner put more money into the company than the other.
  • A poor stretch for the business when they may not be receiving as much income, which can put personal strains on the partners.
  • Different visions for the company or ideas for the direction of the company.
  • One partner embezzles money from the company or is dishonest in other ways.

There are other reasons why partners have disputes. It is important to be able to resolve these disputes quickly. Letting them grow will create a bigger problem and potentially lead to the dissolution of the partnership. One way to help ensure they are dealt with properly is to have a well-written partnership agreement that states how disputes will be resolved. There are many considerations for a well-drafted partnership agreement and consulting with experienced attorneys could be beneficial.