When starting a business with a partner, it`s important to establish a written partnership agreement to ensure that all parties are on the same page and that the business can run smoothly. A partnership agreement is a legal document that outlines the roles, responsibilities, and obligations of each partner in the business. In this article, we`ll go through an example of a written partnership agreement.
The partnership agreement should begin with an introduction that identifies the date when the agreement was created, the names of each partner, and the name of the business.
The purpose of the partnership agreement should be clearly stated. This could be something like “the purpose of this agreement is to outline the terms of the partnership between [partner name] and [partner name] in relation to the operation of [business name].”
Next, the partnership agreement should outline the details of the business, including the legal structure, business location, and the nature of the business. This section should also include information on the capital contributions made by each partner.
Roles and Responsibilities
This section outlines the roles and responsibilities of each partner. It should be clear who is responsible for what within the business, including financial decisions, day-to-day operations, and strategic planning.
Profit and Loss Distribution
The partnership agreement should clearly outline how profits and losses will be shared between partners. This could be based on capital contributions, the number of hours worked, or other factors agreed upon by the partners.
Decision-making is an important aspect of any partnership agreement. This section should outline how decisions will be made within the business, including who has the final say in the event of a disagreement.
In the event of a dispute between partners, the partnership agreement should provide a clear process for resolving the issue. This could involve mediation, arbitration, or other dispute resolution methods.
Finally, the partnership agreement should outline an exit strategy for each partner. This could involve the buyout of a partner`s share of the business, the sale of the business, or other exit strategies agreed upon by the partners.
A written partnership agreement is an important document that should be created when starting a business with a partner. By outlining the roles, responsibilities, and obligations of each partner, the partnership can run smoothly and avoid potential disputes. This example partnership agreement covers the key areas that should be included in any partnership agreement. It`s important to consult with a legal professional when creating your own partnership agreement to ensure that it meets the specific needs of your business.