How to Write a Partnership Agreement Form
The Partnership Agreement
The aim of the agreement is to provide a written structure of your business with respect to each partner’s responsibility, rights, profit/liability sharing, and also the terms on which the partnership can be terminated.
It would be to your best concern, and all the other partners, to involve a solicitor when creating a partnership agreement document. This is so that you get the right advice before you finalise your level of commitment and responsibility to the business with respect to what you can offer (in terms of expertise) and afford.
By failing to do so, any issues or conflicts that aren’t specified on the agreement will be determined by The Partnership Act, 1890 or The Limited Partnership Act, 1907 which may go against you.
When creating the plan, it is important that all partners are present and that they sign the completed document to confirm they understand and agree to what has been stated. The agreement should consist of the following although you may want to overlook some issues or even add some of your own: Important: This agreement is based on a FULL PARTNERSHIP and therefore some changes may need to be made in the structure if you wish to set up a Limited Partnership.
1) The name of the business/partners
This is the agreed name that you will trade by and may include the names of the partners or even a made up name. There are no restrictions to what you can call your partnership business unless the name is already used by someone else. Below this, you should include the full name of all the partners that form the partnership. Example: “The business will trade by the name of ‘Smith & Jones Accountancy’ and will be run by Mr John Smith and Mrs Clare Jones”.
2) Commencement of the partnership
This is the exact date when your partnership will begin trading. Example: “Smith & Jones Accountancy will start trading on Monday 4th February 2002. ”
3) Nature of the business
This will be a brief description to state what the business sells, manufactures, offers, etc. Example: “Smith & Jones Accountancy will provide a book-keeping service along with advice and assistance for small to medium sized businesses, and to provide any business that is agreed by all partners”.
4) Business location
If the business will be run from a number of locations, then all the addresses will need to be listed. It may be that the business is run from an office, say in the town centre, or it may be run from the homes of all the partners. Example: “The business will be located at City Central Offices, 4 Somestreet Avenue, City, Postcode, and any other location that is agreed by all partners”.
5) Set-up investment
You should record the initial amount of capital invested/to be invested into the business by each partner. This may not necessarily be the same for each partner and in which case, may determine the ratio that profits will be split between you (See section 10). Example: “Each partner will provide an initial capital investment of GBP 1000 that will be credited to the business on Monday 10th January 2002. We further agree that this amount will not be removed from the business without the written consent of all partners”.
This will say what each partner will contribute. For example, partner A may contribute the use of their home to run the business and you – partner B, may contribute the use of your car, etc.
Example: “John Smith agrees to contribute the use of his car, registration number A 123 ABC, to be used by all partners for business purposes only. Clare Jones agrees to contribute the use of her home PC if technical difficulties of the work computers put a stop to the business operations for longer than 24 hours”.
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