Partnership Agreement

Protect yourself and your partners with our Partnership Agreement

Get Started on your Partnership Agreement:

1. Complete the Partnership Agreement form below
2. Click on "View Results" at the bottom to preview your Partnership Agreement

Our Partnership Agreement lets you specify:

  • Profit/Loss distribution.
  • Management structure.
  • Partnership voting methods.
  • What happens when a partner leaves.
  • What will be required to dissolve the partnership.


If your company is a Limited Liability Company (LLC) then try our LLC Operating Agreement.

If the parties will interact only on an arms' length basis and do not pool profits and losses then try our Joint Venture Agreement.

If you are unsure which business type best meets your needs then please read our Business Types FAQ.

We regularly maintain this contract. Last Modified: May 2008
Partnership Agreement Details
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Governing Law

Governing State:
Partnership Information Q. What is a partnership?

A. A partnership is a form of business organization in which two or more individuals manage and operate the business with a view to making a profit. Each partner shares a fixed proportion of the partnership profits and losses. Depending on the type of partnership, each partner may be personally liable for the debt and obligations of the company. One benefit of a partnership is that partnership income is only taxed once. Partnership income flows through to the individual partners who will be taxed on their partnership income. This contrasts with a corporation where income is taxed at two levels. Corporation income is taxed twice: first as a corporate entity and also at the shareholder level where shareholders are taxed on any dividends received.

Partnership Name:

(e.g. XYZ Partnership)
Partnership Purpose:

(e.g. Construction and sale of condominiums)
Partnership Address:

(e.g. Street, City, State and Zipcode)
Partnership Start Date:
Partner Information

Number of Partners:

Capital Contribution Q. Can a partnership own assets like a corporation does?

A. Yes, assets can be acquired by the partnership. This is done either by a partner transferring property to the partnership, or the partnership using its profits and other assets to acquire more property. Property acquired by the partnership is held in the name of the partnership but is not property of the partners individually. If property is held in the name of a partner it may not be partnership property even if it is used by the partnership.

Partner Contribution Description Agreed Value
Enter a description and agreed capital value for the Capital Contribution for each Partner. Some Partners may be providing cash while other Partners may be providing property with an agreed cash value.
Check here to show an example:



What is the schedule and details of payment for the Capital Contribution of each Partner?

Partner Schedule
Enter the payment schedule for each Partner's Capital Contribution particularly the contribution deadlines.
Check here to show an example:



Profit and Loss Allocation Method:

Partner Proportional Profit/Loss Percentage
Total: %
Enter a percent of profit and loss for each Partner. Total must equal 100% for all Partners. (Eg. 25, 33.33, etc.)

Tax Matters Partner:
The Tax Matters Partner prepares and submits all tax returns and reports as required by the taxation legislation.

Partnership Management:
Indicate if the day-to-day management of the company will be performed by an individual Managing Partner or through the equitable participation of all partners through majority votes where necessary.

Designate a Managing Partner:
Does the Managing Partner have discretion to hire and fire staff?
Yes No
How is a Managing Partner Removed?
Unanimous vote of remaining Partners
Majority vote of remaining Partners
Who has authority to bind the Partnership in contract?
Percent Vote to bind the Partnership in contract:
(eg. 51, 100, etc)

Voting Method:
Voting may be proportional to each Partner's relative Capital Contribution or proportional to each Partner's relative profit entitlement or there may be an equal vote where each Partner gets one vote.

Description of Voting Rights between Partners:

(e.g. John Smith has two votes, Jason Smith has one vote, and Thomas Smith has no vote.)
Percent Vote for Financial Decisions:
Percent of Partners' votes to resolve distribution of profits, allocation of losses, etc.
(eg. 50, 75, 100, etc.)

Percent Vote for Business Decisions:
Percent of Partners' votes to resolve Partnership business decisions.
(eg. 50, 75, 100, etc.)

When will meetings be held?
(Eg. monthly, quarterly, only as required, etc.)

Who can call a special meeting?
What percent of Partnership vote is required to call a special meeting?

(eg. 10, 51, etc.)
 
Financial Terms

Currency:
All monetary amounts will be in the designated currency.

Fiscal Year End:
Accounting Method:
Cash Basis
A method of recording earnings and expenses only upon receipt or payment without regard to when they occurred or were incurred.
Accrual Basis
A method of recording earnings and expenses as they occur or are incurred, without regard to the actual date of collection or payment.
Valuation of Goodwill:
Assessed using accepted accounting methods
Fixed Value
(e.g. 1, 100, etc...)
Withdrawal of Partner, Assignment of Partnership Interest and Dissolution of Partnership Q. Can a partner transfer their interest in the partnership?

A. Yes, a partner can transfer their interest in the partnership, if the partnership agreement does not restrict the transfer. If a partner incurs debts or becomes bankrupt then a third party may have a claim against the partner's interest in the partnership. However, depending on the terms of the partnership agreement, the recipient of a transferred interest may not be given any power to vote or to participate in decision-making. The rights and obligations of a recipient of a partnership interest may be limited to the profits and losses of the partnership. This is to ensure that the remaining partners are not affected by the extravagance or incompatible notions of a new partner who was not a participant in the original partnership agreement.

Can a Partner withdraw voluntarily from the Partnership?
Yes No
If voluntarywithdrawal is not allowed then dissolution of the Partnership will be required.

Initial Period of Prohibition on Withdrawal, if any?
Enter '0' or 'Zero' to have no initial period of prohibition on withdrawal.
(eg. 6 months, 1 year, 18 months, etc.)

Required notice period for withdrawal:
Notice period required in advance of fiscal year end for a partner to voluntarily withdraw. (eg. 90 days, 6 months, etc.)

Can a Partner assign their interest in the Partnership to a third party?
The Partnership Agreement should designate to what extent, if at all, a Partner may assign their Partnership interest to a third party.

What percent of vote is required to dissolve the Partnership?
(eg. 25, 50, 100, etc.)
How will Partnership assets be distributed on Dissolution or Dissociation?
Miscellaneous Terms

Are Partners allowed to participate in activites in competition with the Partnership?
Yes No
For what time period is a Partner prohibited from competing after withdrawal?

(eg. 2 years, 18 months, etc.)
Should Partners be compensated for services in addition to share of profits?
What is the voting percentage required to amend any part of this Agreement?

(eg. 51, 75, 90, 100, etc.)
Actions that require Unanimous Consent of the Partners Q. Why would the partnership agreement require unanimous consent on some conditions but not others?

A. In general, business decisions will be resolved by a majority vote of the partners. However where the impact on individual partners will be significant, the partnership may wish to resolve these decisions through a unanimous vote in order to protect the interests of individual partners. The partners may want to require unanimous consent for areas that are deemed critical to the success of the partnership, such as hiring/firing of employees or things that will affect the interests of all existing partners and their stake in the enterprise such as bringing on a new partner or acquiring or selling partnership assets or assuming substantial debt.

Admission of a new partner:
Include Do Not Specify

 
Assignment of ownership rights of Partnership Property: Q. What is meant by the option “Assignment of ownership rights of Partnership Property”?

A. Individual partners do not have property rights in partnership property. In order to protect the interests of all partners from unauthorized behavior involving partnership property, the partners may want to enhance the control over the use and disposition of partnership property by requiring unanimous consent on issues involving the use and assignment of property rights in partnership property.
Include Do Not Specify

 
Incurring Partnership liabilities over a fixed dollar amount: Q. What is meant by the option “Incurring Partnership liabilities over a fixed dollar amount”?

A. All partners are jointly and severally liable for the debts and obligations of the partnership. Where expansion of the partnership requires a significant financial investment involving a large debt load, the interests of all partners must be considered before proceeding with that risk. Where the risk is great and where an individual partner may lose some or all of their personal holdings then the partnership may wish to protect the interests of individual partners in the partnership agreement. Within the partnership agreement the partners can agree what level of liability (dollar amount) is acceptable. Any liability over that amount would require the unanimous consent of all partners. Any liability under that amount would only require the consent of a majority of the partners.
Include Do Not Specify
Maximum obligation allowed before unanimous consent is required:
(e.g. 1,000,000.00)

 
Incurring single transaction expenses over a fixed amount: Q. What is meant by the option “Incurring single transaction expenditures over a fixed amount”?

A. All partners are jointly and severally liable for the debts and obligations of the partnership. Individual partners may be exposed to varying degrees of personal risk as the result of the failure of the partnership. A wealthy partner may be much more willing to accept substantial risk. A less wealthy partner may be risking all personal assets. To protect the interests of all partners, the unanimous consent of all partners may be required when making substantial purchases.
Include Do Not Specify
Maximum Single Expense allowed before unanimous consent is required:
(e.g. 50,000.00)

Hiring any employees whose annual compensation is over a maximum amount:
Include Do Not Specify
Maximum annual compensation allowed before unanimous consent is required:
(e.g. 250,000.00)

Firing of any employee:
Include Do Not Specify

 
Sale of a Partnership asset with fair market value greater than a fixed amount: Q. What is meant by the option “Sale of a Partnership asset with fair market value greater than a fixed amount”?

A. Sale of significant partnership assets should require the unanimous consent of all partners so that the interests of all partners are protected. An individual partner cannot sell or otherwise dispose of partnership property. This option includes the situation where an individual partner cannot use partnership property as collateral for a loan (either a personal loan or a partnership loan) without the majority or unanimous consent of the partners where the property could be subject to seizure if the loan was in default. Ensure the fixed amount selected is practical for the size of the partnership. It may be an unnecessary administrative burden to require unanimous approval for the sale of nominal assets.
Include Do Not Specify
Maximum asset selling value allowed before unanimous consent is required?
(e.g. 1,500,000)

 
Releasing any Partnership claim except on payment in full: Q. What is meant by the option “Releasing any Partnership claim except for full consideration”?

A. Where the partnership has a claim against another person or business entity or where a debt is owed to the partnership it is in the best interest of the partnership and the individual partners if these obligations owed to the partnership are paid in full. Whenever an obligation is to be released for less than full consideration it is important that the interests of each partner is represented and each partner is allowed to provide or reasonably withhold consent to the transaction.
Include Do Not Specify

 
Endangering the ownership or possession of Partnership property: Q. What is meant by the option “Endangering the ownership or possession of Partnership property”?

A. Individual partners do not have property rights in partnership property. Where partnership assets are put at risk either by loaning to a third party or placing the asset in an environment where the asset is subjected to theft or loss affects the interest of all partners. In these situations the partnership may wish to require the unanimous consent of all partners.
Include Do Not Specify

 
Assignment of check signing authority:
Include Do Not Specify

 
Annual Report

The annual report to the Partners will include a copy of the Partnership's Federal Income Tax filing and the following:

Supporting Income Statement: Include Do Not Specify
Balance Sheet: Include Do Not Specify
Cash Flow Statement: Include Do Not Specify
Profit and Loss Summary: Include Do Not Specify

Unresolved disputes go to mediation before arbitration?
If no mediation then disputes go directly to arbitration
Additional Clauses Click here for tips on drafting your additional clauses.

Number of Additional Clauses:
First Additional Clause:

 
Second Additional Clause:

 
Third Additional Clause:

 
Fourth Additional Clause:

 
Fifth Additional Clause:

 
Signing Details

Are witnesses required to witness the signing of the Agreement?
Yes No
Date Agreement to be Signed: