When starting a for-profit business with other individuals, you will need to use a partnership agreement template.
A good general partnership agreement template should illustrate the intent to form a partnership, and outline how the company’s ownership, profits, and losses will be shared among the partners.
If you are looking to set up a general partnership, even if it's with family, friends, or acquaintances, using Signeasy’s partnership agreement document can go a long way towards avoiding disputes and facilitating peaceful resolutions.
A partnership agreement decides the terms of a joint venture, and how the business will be run in a general sense. Â
Partnership agreements are mainly created for three types of businesses: limited liability partnerships, limited partnerships, and general partnerships.Â
In this article, we will focus on general partnerships, where business liabilities are borne by the owners (or partners) and not the business. In this company setup, partners pledge their personal assets.
Partnership agreements spell out business relationships, the partners’ rights and responsibilities, and business rules that must be followed to avoid confusion down the road.Â
Let’s unpack the provisions in Signeasy’s general partnership agreement template:
Some of the standard clauses that should be included in your agreement are:
This section answers questions like:
The capital contribution clause elaborates on how much capital each partner is investing and how much interest and ownership they individually have in the business. Sometimes, partners may provide unequal resources when the company is founded – if that is the case, these details will be included in this section. Also make mention of the type of bank account to which this capital should be deposited.
Whether the company turns a profit or incurs a loss, it must be split between the partners according to the percentage of capital contributed. This section helps you decide how the division should be structured.Â
Typically, businesses extract the loss from or deposit the profit to a designated bank account. .Â
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This article specifies when and, how often, financial documents may be inspected by the partners, as well as which documents they are permitted to audit.
Adding a new partner to a business is a big decision, which is why most companies require all partners to vote in favor of this change.
To have greater control over the future of your partnership, this section outlines the rules and protocols to be followed when:
When a partnership needs to be terminated, what are the steps that need to be followed, and how will the company’s assets be liquidated? This section answers both of these questions.
This section is all about the protocols that govern cash transfers, cash withdrawals, and security withdrawals by the business partners.
To ensure that the partners follow the agreement and do not resort to illicit activities, this section outlines a number of forbidden acts.Â
It also includes a clause that states partners who violate any of these rules will have their interests in the partnership business withdrawn.Â
Here, you will find many standard clauses that help make this general partnership agreement more water-tight.
Once all the partners ink this agreement (electronically), it will become legally binding.Â
Use an electronic signature solution like Signeasy to send this agreement to all partners and have them sign a single copy simultaneously (or in a defined order).Â
A partnership agreement is an important document that you will need to discuss and agree upon before entering into a joint venture. It structures your business so that:
Clearly, there are many benefits to using a partnership agreement. Additionally, in the context of the pandemic, signing documents remotely is the most efficient and touch-free way to finalize official agreements.Â
That’s why sending and signing your general partnership agreement is on us! All you need to do is sign-up for Signeasy’s 14-day trial today and start signing immediately.
How do you write a simple partnership agreement?
Can I write my own partnership agreement?
It is best to create a partnership agreement with input from a lawyer, since it is a complex document. The way the contract is written out will decide how much each partner is liable for the debts and actions of the other partners. To get started, we recommend using Signeasy’s partnership agreement template.
How do you structure a partnership agreement?
What are the contents of a partnership agreement?
A partnership agreement should include details like the name, purpose, type of partnership, rights and duties of partners, capital contributions, profit and loss distribution, and dissolution and withdrawal of the partnership.