Partnership Agreement also known as partnership contract, general partnership agreement and articles of partnership. This is a contract between 2 or more business parties and used to establish responsibilities as well as loss and profit distribution. This contract places the labor, capital, skills and corporation in the same place to improve the competitiveness of the companies. As a contract, this agreement also protected by the law.
Who needs this Agreement?
Actually, this agreement does not bound 2 companies or more. Anyone who run a profit business together can make this agreement to get more profit or to reduce the loss. Of course, it includes friends, colleagues and family. If you are a businessperson, you will need it too.
Creating Partnership Agreement must be made based on the type of partnership. In this case, there are 3 partnership types.
• General partnership. It involves by 2 or more partners for profit. Each of them is equally liable for the obligations as well as the debts of the business. This is including the actions of the partners as well.
• Limited partnership. Just like the name, this partnership has been limited in a certain portion. But however, there is one party who has unlimited liability. The other parties only liable for their portion of ownership.
• Limited liability partnership. The term of limited liability partnership relates to a type of partnership which each partner liable to his/her actions only.
What Does Partnership Agreement Include?
Partnership contract includes a certain business information. This is including business partner, profit distribution and loss distribution. Voting methods, management, dissolution and withdrawal also include in this contract. For more specific, these are the included agreements:
• Capital distribution. After making partnership agreement, each partner will receive a percentage of ownership based on the capital contribution.
• Profit distribution and loss distribution. This is depending on the agreement itself. But overall, the distribution can be classified into fixed percent and equal share.
• Voting. Typically, it can be made with 3 possible methods such as proportional to contribution, proportional to profit share and equal vote.
• Partnership withdrawal. There are 2 forms of withdrawal which are including voluntary and non-voluntary.
Why Partnership Agreement is Important?
By having Partnership Agreement, you can improve your business and its competitiveness. It is also useful to reduce the risks and manage the profit much better. Even it allows you to get more profit. But however, you are working with a partner or more. It will be better to make Partnership Agreement as good as possible. Below is a sample of Partnership Agreement you can read and learn before creating your own version either using an attorney help or by yourself. But remember, there are some risks that might arise if you are creating it by yourself since it could be some important things are not covered yet which could lead to a dispute in the future.
Partnership Agreement Template (41.5 KiB, 1,099 hits)
Partnership Agreement Template 2 (85.5 KiB, 323 hits)