Partnership Agreement Items

If you enter into a business partnership, it is of course to want to avoid awkward discussions about a future dissolution that might never happen. No one wants to think of a possible breakup when a relationship is just beginning. However, business divisions are recurrent and for many reasons. Each of these reasons may concern you personally and professionally. This is why the partnership agreement should describe the expiry and exit procedures, regardless of the reason for the separation. It is also advisable to include a language dealing with redemptions and transfers of responsibilities if a partner is disabled or deceased. The partnership agreement should specify what each partner brings to the company. Contributions can take the form of registration, work and management allowances or a combination of the two. This part of the agreement also includes the percentage of the business owned by each partner. If new partners are allowed to join the company, the agreement should specify what a potential partner should put on the table and what part of the business the new partner would own. The name of your business partnership is an important provision because it explicitly identifies the partnership and the name of the company for which the agreement is made.

This eliminates confusion, especially when there are several partnerships and/or companies that may be involved. The partnership agreement should specify how the profits or losses generated by the company are allocated to the various partners. For example, a partner who only contributes as an investor may be paid differently from a partner who participates in and manages the business. Or a partner only for investors could be held not responsible for future losses, making those losses the responsibility of the partners who actually run the business. Businesses created as partnerships, legal entities in which two or more people own and run a business, allow companies to benefit from the multiple knowledge, skills and resources of multiple owners. A partnership is similar to an individual business and each partner owns a portion of the company`s assets and liabilities. As part of the partnership agreement, individuals are committed to doing what each partner will bring to business. Partners may agree to pay capital to the company in the form of a cash contribution to cover start-up costs or equipment contributions, and services or real estate may be mortgaged as part of the partnership agreement.