Partnership agreement template

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.

How to sign a partnership agreement template

1. Download the partnership agreement template.
2. Fill the placeholders in the template with your personal information.
3. Upload the document to Signeasy.
4. Send the file to all the partners in order to collect their signatures.
5. Save the signed copy on the cloud for future reference.

What is a partnership agreement?

A partnership agreement decides the terms of a joint venture, and how the business will be run in a general sense.  

Partnership agreements are mainly created for three types of businesses: limited liability partnerships, limited partnerships, and general partnerships. 

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.

Decoding the partnership agreement template

Partnership agreements spell out business relationships, the partners’ rights and responsibilities, and business rules that must be followed to avoid confusion down the road. 

Let’s unpack the provisions in Signeasy’s general partnership agreement template:

1. Introduction and agreement
   

Some of the standard clauses that should be included in your agreement are:

1. Details of the parties/business owners: Include the names and addresses of the two (or more) partners who wish to start the business together.
2. Name of the partnership business: When choosing the partnership name, make sure that it is unique and not used by any other company. This will make it easier for you to file for the partnership name.
3. Partnership creation: Mention the type of partnership that is being established. 
4. Term of the partnership: How long will the partnership exist? Usually, most partners determine the term to be “perpetual,” so that the business will continue to exist until dissolved by the partners or the operating law. 
5. Purpose: Be clear about the nature and purview of the partnership. Doing so will prevent any one partner from placing costly responsibilities on the other partner’s plate in the future.
6. Business location: Mention where the company’s principal office is located. 
   
   

2. Management decisions

This section outlines the important topics to discuss with your business partners before getting into a partnership, and defines how decisions will be made for the business to avoid creating conflicts.

This section answers questions like:

1. How will decisions related to company operations be made by the partners?
2. When should you hold meetings of the partners?
3. Who will be responsible for the day-to-day operations of the partnership?
4. Will partners have the right to inspect the company’s books and records? If so, how often?

3. Capital contribution
   

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.

4. Profit and loss
   

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. 

Typically, businesses extract the loss from or deposit the profit to a designated bank account. . 

5. Annual audit
   

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.

6. Adding, removing, and withdrawing partners
   

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:

1. A parner wishes to transfer their interest in the business to a living trust
2. A majority of partners wish to remove a partner
3. A partner wishes to withdraw their capital and interest in the business

7. Partnership dissolution and liquidation
   

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.

8. Payment
   

This section is all about the protocols that govern cash transfers, cash withdrawals, and security withdrawals by the business partners.

9.  Forbidden acts
   

To ensure that the partners follow the agreement and do not resort to illicit activities, this section outlines a number of forbidden acts. 

It also includes a clause that states partners who violate any of these rules will have their interests in the partnership business withdrawn. 

10. Contract boilerplate
    

Here, you will find many standard clauses that help make this general partnership agreement more water-tight.

1. Arbitration: Helps you decide how to settle all partnership-related disputes.
2. Binding and legal: Names every stakeholder that this agreement legally binds and benefits, other than the partners.
3. Severability: Mentions that the agreement will still be valid even if certain clauses are deemed invallid.
4. Governing law: Mentions which state’s laws will govern the interpretation and enforcement of the clauses in this agreement. 
5. Entire agreement: Talks about the rules regarding amendments to this agreement.
6. Counterparts: In case there are many counterparts to this agreement, this clause states that all of them will be considered as original documents.
7. Notices: Defines how notices to partners need to be sent and acknowledged.
8. Compliance: Emphasises that even if compliance with any part of this contract is  not insisted upon by a partner, it doesn't mean that the clauses have been waived.
   

11.  Signature section
    

Once all the partners ink this agreement (electronically), it will become legally binding. 

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). 

Why do you need a partnership agreement?

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:

• Investors, lenders, and professionals have the confidence to invest money, offer financing, and provide proper legal/tax help.
• It doesn't need to be run according to the state’s default partnership rules. A partnership agreement helps you formulate a customized manual that places the control and flexibility of running a business firmly in your hands.
• You may avoid unexpected tax liability. With a formal partnership agreement, the business will not be held responsible for any taxes – instead, the partners will pay tax on their individual tax returns.
• Every partner’s share of the business, and the associated profits and losses, are clearly defined.
• It's easier to anticipate and settle future business conflicts.

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. 

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.

Partnership agreement template FAQs

How do you write a simple partnership agreement?

1. Choose a comprehensive general partnership agreement.
2. Verify that the template talks about capital contributions, taxation, management and voting, and withdrawal and dissolution of the partnership.
3. Fill in the template’s placeholders with your partnership’s information.
4. Confer with a lawyer to see if any special provisions need to be added.
5. Electronically sign the document yourself and request signatures from other partners using Signeasy.
   

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?

1. Name, term, location, and purpose of partnership
2. Type of partnership
3. Capital contributions
4. Profit and loss distribution
5. Management and voting
6. Adding and withdrawal of partnership
7. Dissolution of the partnership
8. Boilerplate clauses
   

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.