Company Agreements: Building A Strong Foundation For Your Business
Owning a small business involves much more than the excitement of opening your doors for the first time. Behind the scenes, the most critical elements are ensuring your business is legally sound and operates smoothly. One of the most important steps you can take as a new business owner is creating a solid company agreement, which clearly outlines the rules and guidelines for your business to function effectively and efficiently.
A company agreement serves as a customized framework that establishes how your business will be managed. Think of it as your business’s rulebook, ensuring that everyone from the owners to key employees understands their rights, responsibilities, and the procedures that govern your company. Key topics in a company agreement include ownership structure, allocation of profits and losses, voting power and guidelines for handling the transfer of ownership or dissolution of the company.
Here are some of the essential components these documents usually cover:
- • Distribution of profits — How payments will be made to members or shareholders.
- • Dissolution and liquidation — Outlines the steps for closing the business if necessary.
- • Transfer of interest — Explains how ownership interests can be sold, transferred or gifted.
- • Allocation of profits and losses — Defines how profits or losses are handled within the company.
- • Voting power — Clarifies each owner’s decision-making authority within the business.
Company Agreements In Texas
While Texas law does not require small businesses to have a company agreement, opting out of one means your business will automatically adhere to the state’s default provisions outlined in the Texas Business Organizations Code. These default provisions may not always align with your business’s needs, so it’s wise to create a custom agreement that reflects your specific goals and operational preferences. If a situation arises that your company agreement doesn’t address, the default provisions will step in to fill the gaps.
Custom Company Agreements
Because no two businesses are alike, a one-size-fits-all approach to company agreements simply won’t do. Daniel Burke understands the importance of tailoring agreements to suit your unique business needs. With nearly two decades of experience, he brings both legal expertise and a personal commitment to ensuring every aspect of your company agreement is carefully considered.
As a small business owner himself, Daniel Burke knows how crucial it is to protect your business from the very beginning. By choosing Daniel Burke Law to draft your company agreement, you can trust that you’ll receive comprehensive legal guidance at an affordable rate, setting your business up for long-term success.