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Partnership Agreement Form PDF Free Download
Partnership Agreement Template
A business partnership is a big commitment.
You should use a Partnership Agreement to ensure you outline your rights and responsibilities within the arrangement.
Using a Partnership Agreement template means you and your new business partner will have an agreement that you can rely on and be confident that your requirements are met.
Learn everything you need to know below, including the different types and how to write this document.
Partnership Examples
This partnership agreement can be used for:
Small businesses
Real estate companies
Law firms
Medical offices
50/50 arrangements
Family-run businesses (ex. husband and wife)
Partnership Types: Differences
| Partnership Types | Who Has Personal Liability? | Required to be Active | Annual Meetings Required? |
| General Partnership (GP) | All partners | All partners | No |
| Limited Partnership (LP) | General Partner(s) only | General partner(s) | No |
| Limited Liability Partnership (LLP) | All partners (for negligent acts only, not for debts) | All partners | No |
| Limited Liability Limited Partnership (LLLP) | No partners | General partner(s) | No |
| Limited Liability Company (LLC) | No partners | No requirement | Yes |
What to Include in a Partnership Agreement
A general Partnership Agreement should generally have details outlining at least the following:
Who are the partners
What did each partner contribute
Where are you doing business
When does it begin and end
Why was it formed
How are profits and losses distributed
What will happen if a partner leaves or passes away
Here are some other valuable details an agreement might include:
Accounts
Capital Accounts: the members will keep a separate account for each partner’s capital contributions
Income Accounts: the members will keep a separate account for each partner’s profits and losses from the partnership
Salary and Drawing: will the partners receive a salary, and can they withdraw from their income account at will
Bank Accounts: the members will keep a separate account for the partnership’s funds
Management
Books and Records: how the members should maintain their books and records and who can inspect them
Management: how the partners will manage and the duties of the partners
New Partners: when and how can new partners join the partnership
Partners
Dissolution: when and how the partnership will be dissolved
Withdrawal: when and how a partner can leave the partnership
Retirement: what happens if a partner retires
Removal: how to remove a partner
Death: what happens if a partner dies
Buyout: whether other partners have the right to buy out another partner’s interest if they leave the partnership
General
Restrictions on Transfer: are there any restrictions on a partner’s ability to transfer their interests in the partnership?
Arbitration: how will disputes about the agreement be resolved
Governing Law: which state’s laws apply if there is a problem with the agreement
You must also register your partnership’s trade name (or “doing business as” name) with the appropriate state authorities.
How are Profits Taxed?
Partnerships are considered pass-through entities and taxed on a personal level (26 U.S. Code § 701).
The partnership will send copies to each partner of a Schedule K-1 (Form 1065) that reports their portion of income (or deductions).
The partner must then attach the Schedule K-1 to their personal filing when submitting it to the IRS.
Self-Employment Tax
Only general partners are subject to self-employment taxes. Limited partners pay taxes based solely on the partnership’s pass-through entity status.
LLCs
An LLC of two or more individuals, by default, is taxed as a partnership unless it files IRS Form 8832 within 75 days of formation (26 CFR § 301.7701-3(c)(1)(iii)).
How to Write a Partnership Agreement?
Writing a Partnership Agreement doesn’t have to be complicated; follow these steps:
Step 1 – Partner Information
a) List the state governing the agreement
b) List the date the agreement was signed
c) List partner names and complete physical addresses
Step 2 – Partnership details
a) Provide the complete legal name of the partnership entity.
It should be the name you have registered with your appropriate state department.
If you have not formally created your legal entity, check with your state to ensure that the name you are using is available and check to be sure that you are not infringing on any existing trademarks.
You may also want to file with the state to reserve the name.
b) Describe the purpose of your business and list the types of business activities that you will be engaged in.
c) This is the address where the business will operate and conduct business.
This should be a physical address, not a PO Box.
If you have registered your business with your state then you should provide the address that you used in that filing here.
If you are a completely virtual business without a physical business address then you can use a personal address.
d) Provide the date that the partnership will become effective.
This can be done immediately upon signing this document or at a future date.
If you have a specific date for the partnership to end, you will list it here.
Otherwise, you will choose the preceding option, and the partnership will terminate upon the happening of events and as prescribed in the partnership agreement.
Step 3 – Partner Capital Contributions
a) If partners are required to make capital contributions to the partnership, you will need to state when those contributions should be made here.
You can choose when contributions should be received (for example within 30, 60, or 90 days of the effective date of this agreement or on or before a set date).
b) Contributions are how much and what each partner will invest.
They can be in the form of cash, property services, or expertise. You will list the number of contributions and describe the contributions here.
Step 4 – Capital Accounts, Profits and Losses, and Income Accounts
a) Capital accounts can pay out interest.
You can decide whether the partners’ capital accounts will or will not pay out interest to any, all, or none of the partners depending on specific partner contributions and/or the goals and operations of your business.
b) Depending on each partner’s initial and future contributions, you can choose to divide profits and losses:
equally between the partners
proportional to each partner’s capital contributions
according to set percentages
Partners can also choose to have the profits distributed at a different ratio than the losses.
c) Each partner will have a separate income account.
The partner’s share of profits and losses will be credited to or charged against.
You can choose whether interest will or will not be paid to any, all, or no partners here.
Step 5 – Partners’ Salary and Drawings and Partnership Bank Accounts
a) Partners can receive a salary for their labour and services.
It is essential to consider the partnership’s profits, the goals of the partnership, and the partners’ contributions when determining salary.
The IRS considers a partner to be an employee only if the partner provides services other than his or her capacity as a partner, which could affect how both the partnership and the partner are taxed.
b) Choose this option if no salary will be provided to any partner.
c) Choose how partners can withdraw their profits from their income account here, either withdraw anytime, withdrawal with written consent from other all partners, or at the end of a set period (monthly, quarterly, yearly).
d) Provide the name of the financial institution where partnership funds will be held and list who can withdraw and sign on behalf of the partnership on this account.
It can be all partners, anyone partner, a majority of partners, or another arrangement you have decided upon.
Step 6 – Partnership Books and Records
a) This is the physical address where books and records will be stored.
This can be at the partnership’s principal place of business or elsewhere, like with a lawyer or CPA.
b) Choose who can inspect the books and records, any partner and their representative, or any partner.
c) List the partnership’s fiscal year.
Most businesses will follow a calendar year, but you can choose any date for the beginning and end of your fiscal year.
d) This is at your discretion but typically occurs within a couple of months.
You want to be aware of any state or federal deadlines that may require this information when deciding the deadline to prepare the statement and balance sheet.
e) Choose when audits can be performed, anytime at a partner’s request or at the end of the fiscal year.
Step 7 – Management and Voluntary Dissolution of Partnership
a) You can decide to allow each partner the sole authority to make decisions on behalf of the partnership.
If you want to limit this authority you can limit this decision-making authority to only significant or ordinary choices.
A partner can decide on behalf of the partnership or bind the partnership to a contract without consulting the other partners.
b) You can choose to have the partnership dissolved upon unanimous consent of the partners or another event.
Upon dissolution, it is standard to liquidate and wind up the partnership’s affairs and distribute any remaining proceeds.
Step 8 – Partner’s Withdrawal
a) There are several ways a partner can leave the partnership.
You can allow them to leave at any time or only after a certain number of years by providing a certain number of days’ notice.
Or you can enable them to go only with the unanimous consent of the other partners.
Once a partner leaves, you can choose to have the partnership automatically terminated, allow the other partners to purchase the interests, or give them the option to choose between both.
b) At some point the partnership may decide that a specific partner’s actions are so harmful and detrimental to the partnership, they need to be removed.
Step 9 – Partner Retirement and Partner Death
a) A partner may choose to retire from the business before the end of the partnership.
You can choose to allow a partner to withdraw or require that the retirement is at a specific time.
b) List the time allotted to provide written notice of intent to purchase the remaining partners of the deceased partner’s interest after death—for instance, 14 days.
Step 10 – Buyout, New Partners and Arbitration
a) The buyout price is the price the partners must pay for the withdrawing, retiring or deceased partner’s interest.
b) Your Partnership Agreement can specify that no new partners will be admitted to the partnership at any time or that new partners will be admitted to the partnership upon the agreement of the current partners.
c) All parties agree to resolve disputes over the agreement by arbitration.
Arbitration is when an arbitrator, a neutral third party selected by the parties, evaluates the dispute and determines a settlement.
The decision is final and binding.
Choose the state in which you would like any arbitration hearing held.
Typically this will be the state governing this agreement.
Step 11 – Signatures
a) Partner signature and full name
b) Representative signature and full name.
| Author | – |
| Language | English |
| No. of Pages | 7 |
| PDF Size | 2 MB |
| Category | Form |
| Source/Credits | eforms.com |
Partnership Agreement Form PDF Free Download