How to Set Up a Partnership Agreement

One of the most important requirements of starting a partnership is to write and sign a partnership agreement. This contract establishes the main tenets and guidelines for the new company. All partners must sign this agreement for it to be valid. This piece of paper forms the partnership—without it the parties are operating as separate small-business people. Make sure you are thorough and detail-oriented when you draw up this agreement, to reduce the chance of disagreements between partners down the line.

Instructions

1. Type in the full name and address of each partner and date the agreement--this will be the initiation date of the partnership.

2. List the "doing business as" or fictional name of the partnership (see Resources). This is a business name that is different from your personal name or the names of any of your partners or any registered corporation or limited liability corporation name.

3. Summarize the intention of the partners to come to an agreement to enter into business. Describe the type of business that you are entering into.

4. Define the type of partnership—general or limited. A general partnership is simply two or more people working together in the course of business. All partners have joint liability. A limited partnership can include both general partners and "silent partners," who have less of a role in the daily operations of the business.

5. List the business address or headquarters of the partnership. Explain the general purpose of the business in greater detail. For example, if you're forming a partnership to offer financial services, describe your plans to counsel people on financial matters and help them manage investments.

6. Describe the specific contributions expected of each partner. Be specific--confusion about a partner's role can lead to disputes in the future.

7. List each partner's financial contribution to the business and the percentage of each partner's share of the business (for example, 50/50 or 60/40).

8. Define the term of this partnership, if it is for a certain period of time. Some partnerships are set up for only a few months or years to accomplish a specific goal.

9. Gather all partners to sign the agreement in the presence of an attorney or notary. Distribute copies to each partner.

References

• BizHelp24: How to Write a Partnership Agreement Form
• FindLaw: Sample Partnership Agreement
• Pandab.org: What is the Difference Between a General Partnership and a Limited Partnership?

Resources

• Business.gov: Business Name Registration (Doing Business As)