How to Write a Partnership Agreement

A partnership agreement is the contract between people going into business together. It records what each partner puts in, how profits are split, who decides what, and what happens when someone wants out. Most partnership blow-ups trace back to things that were never written down — so this is the document that protects both the business and the friendship.

Our free partnership agreement template covers the sections below.

Write it even with people you trust

Without a written agreement, many places apply default partnership rules that split everything equally — which may not match what you actually intended. A clear agreement lets you set your own terms and keeps a disagreement from turning into a legal mess.

1. Name the partnership and its purpose

State the business name, the partners, the purpose, and the start date (and end date if it is for a fixed term). This defines what you are all agreeing to run together.

2. Record contributions and ownership shares

List what each partner contributes — cash, equipment, property, or work — and each partner's ownership percentage. Ownership often tracks contributions, but it does not have to; whatever you decide, write it down clearly, because it usually drives both voting power and profit share.

3. Split profits and losses

Say how profits and losses are divided and how and when partners get paid (draws or distributions). If profit sharing differs from ownership percentages, spell that out to avoid the single most common partnership argument.

4. Define decision-making

Explain how decisions are made: which everyday matters any partner can decide, and which major actions (taking on debt, adding a partner, selling the business) need a majority or unanimous vote. Clear rules here prevent deadlock.

5. Plan the exits — this is the important part

Cover what happens when a partner wants to leave, dies, or becomes unable to work: buyout rights, how a departing partner's share is valued, restrictions on selling to outsiders, and how the partnership can be dissolved. Deciding this while everyone is on good terms is far easier than during a crisis.

6. Have every partner sign

All partners should sign, and each should keep a copy. When partners are in different places, electronic signatures make it easy — everyone signs online and gets the same executed copy with an audit trail.

Partnership vs LLC

A partnership agreement governs a partnership; if you have formed a limited liability company instead, you want an LLC operating agreement. Many small businesses choose an LLC for the liability protection — worth considering before you finalize the structure.

Disclaimer: This article is for general informational purposes only and is not legal or tax advice. Business structures and partnership rules vary by jurisdiction; consult a qualified professional before forming a partnership.