There are a lot of things that go into owning a small business. Unfortunately, the most important aspects aren’t nearly as fun as choosing paint colors or hiring a man to dance outside your establishment with a “Grand Opening” sign. With any new business, it’s important to have clear rules and guidelines to ensure smooth operation company-wide. Having a Company Agreement for your small business will put everyone on the same page, and set your team up for success.
A Company Agreement is a custom-written document for a company that lays out the framework for how it will operate. In other words, it’s like your very own rulebook for the owners and other employees in charge of your business. Company Agreements cover things like ownership structure and members’ rights and responsibilities.
Other items that a Company Agreement usually cover include:
- Distribution of profits (payments made to members or shareholders)
- Dissolution and liquidation (what happens if the business must close)
- Transfer of membership interest (owners adjusting terms of their ownership, selling part of their interest, or giving away part of their interest)
- Allocation of profits and losses (how profits or losses will be handled)
- Voting power (how much say each owner has within the company)
Company Agreements in Texas
Many states, including Texas, do not require a business to have its own Company Agreement. However, if a company opts out of its own Company Agreement, the company must adopt and adhere to the provisions of the Texas Business Organizations Code, otherwise known as “Default Provisions”. Similarly, if a company has their own Company Agreement, but something comes up that isn’t mentioned in their document, then the company must look to the Default Provisions to find a solution.
Because every business is different, it’s always recommended to draft your own Company Agreement. Daniel Burke has perfected his art as a Company Agreement Attorney and will ensure that no rock is left unturned when dealing with your business. Protecting your company and the people who run it is critical when opening a small business. You can trust Daniel Burke to create your Company Agreement at an affordable price.