The decision to become self-employed is an important decision in itself – but the decision to team up with a partner is a completely different area. If you`re thinking about starting a business with a partner, consider structuring your business as a general partnership. This is perhaps the most important section of your partnership agreement. Here you present the participation of each partner in the company and its profit shares. These can, but do not necessarily have to be, the same. For example, a partner can contribute up to 70% of a company`s resources. Another partner can only contribute up to 30% of a company`s resources, but brings with it most of the knowledge and skills of the market. In this case, the partners might find it fair to establish a roughly equal distribution of profits. To avoid conflicts and maintain trust between you and your partners, discuss all business goals, each partner`s commitment, and salaries before signing the agreement.

The characteristic of a collecting commercial company is that the shareholders are personally liable without limitation for the debts and obligations of the company. This means that in most states, a person with a legal claim against the partnership can sue some or all of the general partners. Later, general partners can clarify among themselves who is responsible for which losses, as described in the partnership agreement. As a rule, profits and losses are divided according to the same percentages. There is no state that requires a partnership agreement, and it is possible to start a business without one. Some partners only have a verbal agreement or quickly write something in a notebook to establish their partnership (remember all the movie scenes “on the back of the towel”?). We recommend starting a business only after all partners have signed a written and comprehensive partnership agreement. You must register the signed agreement with other important business documents. Some partnership agreements may also define the management roles of each partner, if necessary.

Partner participations and redemption options may also be included. When creating a business partnership agreement, you have several online resources to help you. However, these agreements may not be specific to your situation. For example, using an LLC operating agreement to meet the requirements of a partnership agreement may exclude the necessary terms and policies. Small business owners should consider including non-disclosure agreements (NDAs) or non-compete obligations in their partnership agreement. Non-disclosure agreements prohibit partners from disclosing confidential information about the partnership. Non-compete obligations must be time-consuming and long-lasting, but must prevent a partner from setting up a closely competitive business or recruiting partners for a competing company. There are certain types of partnerships from a legal and tax point of view. The structure you and your partners use varies depending on the industry, investment strategy, willingness to take personal responsibility, strength of the relationship, individual background, and location.

Consider your options wisely before making a decision. While these free online business partnership agreement templates are great for helping you get started and thinking about what to include in your agreement, having your draft contract reviewed by a lawyer and helping you review and finalize the document before signing it is always a best practice. Once a lawyer has confirmed that your business partnership agreement is complete and legally binding, you and your partners can sign it to make it official. LawDepot`s partnership agreement contains information about the company itself, business partners, profit and loss distribution, as well as management, voting methods, resignation and dissolution. These terms are explained in more detail below: When it comes to structuring your partnership, make sure you choose the type of entity that best suits your situation and business needs. Legal errors can become costly efforts. Talk to a small business lawyer if you have any questions or need advice on starting a partnership in your state. If you`re working with another person and don`t want to be seen as a partner, it`s important to create an agreement and get both parties to sign that the work is not a partnership. It is important to make it very clear that the partnership does not exist and to keep records to support this decision.

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