Starting a new company is an exciting undertaking but is also one that should be done carefully and in consultation with expert legal guidance every step of the way. One of those areas where you’ll want to consult an attorney is your business partnership agreement. A well-documented partnership agreement can set the course for a successful business and business relationship. 

Below are some important clauses you’ll want to include in your partnership agreement, although the list is by no means exhaustive. Call us at The Law Offices of Alex D. Sirulnik, P.A. to ask questions regarding your specific business needs.

What to Include in a Partnership Agreement

A well-drafted partnership agreement is essential for defining the structure and operation of a business partnership. It provides clarity and protection for all partners involved and helps to prevent misunderstandings and conflicts. By including the following elements (and others relevant to your business), you can create a comprehensive agreement that supports the long-term success of your partnership.

  • Capital contributions – How much will each partner contribute to the partnership in cash, property (physical and intellectual property), securities, service, and other assets? You will also want to make clear the percentage of ownership interest of each party in your agreement.
  • Distributions – Determine when and how you will allocate and distribute your profits and losses. Perhaps one partner will want to invest more in the business and the other would like to be able to take out money. Or perhaps the business relationship is such that one party is responsible for the day-to-day management of the business while the other contributes primarily as an investor. How will distributions be handled in your business?
  • Decision making – Define how you will handle day-to-day management of the business as well as how long-term decisions about the business will be made. Who ultimately gets to decide if a consensus cannot be reached? Spell out clearly what each partner’s rights and responsibilities are in terms of the decision-making process.
  • Dispute resolution – Arguments are part of growing a business. Healthy conflict can even be good, but at times tensions can escalate and even lead to lawsuits. Now – while everyone is still clear-headed and calm – develop your plan for resolving disputes, which may include requiring mediation and arbitration as a way of keeping the dispute out of court.
  • Dissolution – In your agreement, be sure to include what steps will be taken if you want to legally end your partnership. State laws govern business dissolution, so you’ll want to ensure full understanding of what will need to be done in your state to formally end your business partnership. 

Protecting your interests and investments with a well-documented partnership agreement is an essential step in establishing your business. The above list of key clauses to include in your partnership agreement is by no means complete, but it gives you a starting point for considering all of the unique aspects of your business relationship.

Before entering into a legal agreement, be sure to connect with a business attorney so they can advise you on important steps to take during your business formation. We’re standing by to help. Get in touch with our team at the Law Offices of Alex D. Sirulnik, P.A. to schedule a consultation.