Case Study $6$

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You and your best friend have just graduated from college. You graduated with a BBA, with a major in Management; your best friend graduated with a BBA in Marketing. The two of you decide to start a landscaping business $-$ you have elected to legally organize as a partnership $-$ you will be taxed as a partnership. There is no legal requirement to have a written partnership agreement $-$ the two of you decide to not write up such an agreement. A well$-$written partnership agreement would spell out each partner's responsibilities, as well as how to divide profits and losses. Because you trust each other, you decide it is not necessary to have such an agreement. Your parents tell you this is a big mistake. Why would they tell you this? What types of problems could arise from lack of a partnership agreement?