Creating a partnership agreement for your business will ensure you protect yourself and your partners. You may think it is awkward, especially if you go into business with family and friends, but in the end, you will be glad you did it.
The U.S. Chamber of Commerce explains that you want a partnership agreement to cover as much as possible in order to make duties and responsibilities clear. While you can write up the agreement however you want and include whatever you want, there are a few things that you should always include.
Ownership
You should outline the percentage of ownership for each partner, including the authority to make decisions and handle business activities. This also needs to include information about the contributions of each partner to the business. You will want to have as many details as possible so that there is no confusion on the general responsibilities of each partner.
End of partnership
Your agreement should cover what will happen if one partner wants to leave the business. This might include details on how to divide the remainder of the business and the payoff calculations. You may also want to include specifics in this section about what happens when a partner dies or divorces.
Identifying information
This may seem obvious, but you want to make sure that the agreement includes the full business name that you will use to operate under. If you have deviations you may use, then include those, too.
Earnings
The agreement needs to specify the earnings for each partner. This needs to include profits and losses.