Download my collection of 20 Free Partnership Agreement Templates to help you in preparing your own Partnership Agreement.
If you choose to do your own business, you choose to walk on a lonely road. It is a common practice that small business owners often initiate an individual owner business structure. With the passage of time they come to know that greater benefits are possible if they create a business joint venture with another person or group. In fact, a partnership can provide such chances that result in earning greater profits.
To prepare a beneficial partnership, it is imperative that all concerned partners must come on the same strategic direction of the business. Significantly, an open communicating affiliation is a must to fabricate a physically powerful partnership.
Normally, most of the small business owners that pave the path of partnership sign a partnership agreement. It is not a difficult task to set up a partnership because of the fact that it requires no legal documents. In order to avoid possible problems between two or more parties it is better to choose a Legal Partnership Agreement.
Though there is no legal requirement to draft any written partnership agreement yet doing so has importance for certain reasons. In this way the responsibilities of each partner and essential terms of the contract are on limelight. In case of any clash among the parties, the written agreement goes a long way to resolve it amicably.
Partnership Agreement Guidelines
The basic requirement for a true agreement is the involvement of everyone to the terms. You and your partners are free to agree on what is acceptable for both of you, yet a few things are important to consider that include:
- If you fix the nature and purpose of partnership, it will go a long to keep the partners deviating from the vital purpose of the business.
- The capital payment of each will ensure that none of them can dispute on capital part of partner to the business. The contract should also include other than cash contributions such as supplies, services and time.
- You have to decide profit and loss distribution keeping in view the situation as generally a joint venture allocates profits and losses equally.
- The contract should establish the authority of each partner specifying who will run the partnership on everyday basis.
- The criterion of admitting new partner needs to derive. Usually a common vote is enough for this purpose.
- You have to decide the course of action if a partner passes away. Generally, the joint venture terminates. But it is better to accept this procedure.
- It is important to clear in which circumstances, like death, divorce or any legal activity, the joint venture can be bought out the share of a partner and the method of executing this takeover.
- You have to include signature right on partnership bank account. It is up to you to allow each partner to sign on the behalf of entire business or may decide to need all associates to sign checks.
- You should keep in mind that in case of clash you may not resolve it properly. The agreement may permit partners to appoint a mediator or send it to obligatory negotiation ignoring normal legal action.
Free Partnership Agreement Templates
Here is preview of a Free Sample Partnership Agreement Template created using MS Word,