It's a good idea to have an attorney help set up a partnership agreement that spells out exactly what is expected of each partner. The agreement should describe the role of each partner; indicate who contributes money, property, skill or labor to the partnership; define how much each partner contributes; and specify what happens when the partnership ends. The agreement should also indicate how income, gain, loss, deductions or credits will be split between the partners and who will make specific kinds of decisions.   

Keep in mind that partnerships can have a downside. Partners may be liable not only for their own debts but also those incurred on behalf of the partnership.

To help build a strong partnership:

• Communicate openly and honestly with your partners.
• Set up a trial period to see how well you work together.
• Specify the percentage of ownership each person will have.
• Define who will contribute cash, property or expertise.
• Prepare a business plan and financial forecast for the life of the partnership.
• Determine who will provide additional cash if it's needed.
• Provide a method for removing a partner who fails to meet his or her obligations.
• Define how, when and in what order profits will be allocated to partners.

Whenever you share important functions with a partner or other key employee, you're turning over a key part of your business. If something happens to one of you, it can have a serious impact on your business. Obtaining 'key person' insurance coverage is one way to financially protect a company if one of the covered key employees should become disabled or die. Talk to a qualified business insurance agent to find out more about this kind of coverage.  

Personnel Matters
One measure of a successful small business is its ability to hire the right employees. As a small business owner, the responsibility for personnel matters falls on your shoulders. Before you even advertise an opening, sit down and write a complete job description for the position. It will help you create your ad and will give you a useful yardstick for measuring the qualifications of those who apply.

Keep in mind that there are many federal and state regulations designed to protect the rights of potential employees. To help avoid violating anti-discrimination laws:

• Advertise job openings in widely read newspapers so they come to the attention of many people.
• Carefully define the skills, education and other qualities that are necessary to perform the job so you don't unnecessarily exclude competent applicants.
• Avoid screening procedures that have an unfair impact on any group of applicants.  

Once you've hired good employees for your business, you'll want to work at building a loyal work force. It may take more than good pay to keep employees pleased and productive. Here are some of the additional things most employees want in a job: 

• A pleasant work environment.
• The knowledge that they are contributing to the work of the company.
• An opportunity for advancement and recognition of a job well done.
• Comparable pay for comparable work.
• Fair treatment.

If you are unable to reward employees with more pay, consider other ways to recognize their contributions. Give employees a bonus day off, treat them to a lunch or dinner or offer some sort of special recognition such as an "employee of the month" designation. And don't overlook the importance of an occasional pat on the back, along with a 'job well done.'

In spite of your best efforts at hiring, screening and motivating employees, you probably will have to fire someone at some point. But firing an employee, even someone who is incompetent, can be risky. You may be exposing your business to the possibility of a lawsuit. Angry employees in some locations have taken to suing employers for wrongful termination, and there have been many cases where the courts have sided with the employee. Make sure you have legitimate business reasons for firing someone--reasons you have carefully thought out and documented. Be sure the standards you are applying are fair and consistent and do not discriminate. They also should be easily understood and clearly communicated to the employee.   

Some of the reasons that may support a firing include:

• Performing poorly on the job
• Refusing to follow directions
• Violating company policy
• Being dishonest  
• Using drugs and alcohol in the workplace
• Divulging company trade secrets to outsiders