What is a partnership agreement?
Learn more about partnership agreements — and why you need one to start your business.
A partnership agreement is a contract between businesses or individuals who are running a business together. It sets rules for partners to follow in order to prevent any future fallout or disputes. The document establishes responsibilities, profit distribution, and any other guidelines on financial reporting or capital contributions.
Before you go into business with a partner or merge your business with another, make sure you have an airtight partnership agreement in place. It will help secure your end of the deal and prevent legal issues down the road.
What should be included in your partnership agreement?
When you’re drafting your partnership agreement, ask yourself these questions:
- Capital contribution: How much money is each partner putting into the business ? What happens if the business needs more money? What is each partner’s role in this business?
- Decision-making: What is your strategy for making decisions as business partners?
- Salaries and distributions: How will you each get paid? What are your long-term financial goals as a business — do you want to go national or maintain a small, local reach? How should money be allocated amongst partners?
- Dissolutions: What will happen if a partner no longer wants to be involved in the business?
Answering these questions can help guide your contract development process. However, make sure you consult a legal expert before finalizing your partnership agreement to ensure it meets your own business needs.
Easily create, securely sign.
With Adobe Pro DC with e-sign, you can create confidential, electronic documents for your business, including partnership agreements, and then easily sign, share, and store them for a secure digital trail.