When you agree to enter ownership of a business with other individuals, there are several factors involved that could affect your future if your circumstances should change. While you might not plan to sell your share of the company in the near future, you may want to later on when you reach retirement age or if your financial status changes. Creating a buy-sell agreement at the outset may have several advantages that can protect your interests in the future.

1. It Provides an Escape Hatch 

Not all business partnerships are profitable and there may be a time when you and the other company owners start to disagree and have a difference of opinion regarding the future of the business. A buy-sell agreement can provide you with an escape hatch of sorts and give you the option to sell your shares if you are no longer happy with your involvement. Outlining these terms in a document can help you avoid a lengthy court battle later on.

2. It Creates a Contingency Plan 

When you buy into a business, it can be difficult to gauge the future and what might happen. Illness, divorce or the death of a spouse might all change your life in a variety of ways. A buy-sell agreement can provide a contingency plan for these possible circumstances. For example, you can add that you reserve the right to sell your shares to another partner in case of illness, as long as you notify the other owners in writing. These types of clauses can give you peace of mind in the face of an uncertain future.

3. Improved Stability 

A buy-sell agreement can provide you with a guided plan for the future, especially with a family-owned business. With this type of document, you can plan who will take over the leadership of your company if you no longer can, such as your eldest adult child or a spouse. This can prevent messy share transfers and arguments that might sink a small business, especially if one individual involved takes another to court to fight for ownership.

4. Retirement Benefits 

Retirement planning can help you understand what kind of budget constraints you might be facing when the time comes and how the sale of your share of a business can bolster your income. Consider adding clauses to a buy-sell agreement that includes your rights to choose a share price and a buyer.

Creating a viable buy-sell agreement can be a daunting task, especially if you own a business with other people, but help is available. Call a business lawyer in Wilkes-Barre, PA, like from Hoegen & Associates, P.C., today for further information.