Going into business in New York carries a significant amount of risk, but the right partner may make all the difference. Before getting under way, though, Chron.com notes that entrepreneurs should consider the ramifications of owning a company together if things do not go as planned. A formal partnership agreement can allay the consequences by addressing the issues before they come up.

Control and ownership are among the first things that partners should agree on. This primarily includes who is in charge of which responsibilities, and how much of the profits and liabilities belong to each person.

The Small Business Administration points out that there are many facets to the decision-making that occurs in any company. For example, signing contracts with vendors, clients and others binds the business in a number of ways. If one partner does this without the other’s knowledge or consent, it could cause serious conflict, but would not be easily reversible due to the legal obligations of fulfilling the contracts. By clarifying which actions require consent and which either partner may take independently, they can avoid this type of dispute.

If a dispute does arise, partners need to have a plan in place for resolving it without taking the matter to court. Mediation clauses typically outline exactly what needs to happen to keep a conflict from destroying the company.

One partner may want to retire before the other, or a death could end the partnership. To prevent the loss of a partner from ending the business, partners should include an agreement that allows each person’s interest in the company to be valued and purchased.