Partnership Agreement checklist

Partnership agreement checklist:

• Get clear with your lawyer on the form suitable for your state/area. ( You may find appropriate examples on the Web).
• Give a proper name to new partnership

Agree on a name for your partnership. Commonly businessmen use combinations of surnames or company names.

• Define contributions to the partnership

Elaborate in details and state in special clauses who and what will contribute. Decide what money, property, services, technologies or anything else will be contributed to your business before it opens. Determine ownership part each partner will have.

• Determine allocation of profits and losses

Decide and agree how profits and losses will be divided and distributed among partners. Define if money will be allocated in proportion to a partner's part in the business.

• Decide about draws

Determine if partners will be entitled to a regular draw (a withdrawal of allocated profits from the business) or all profits should be distributed at the end of each year. Signing contracts on this will help to avoid many potential issues.

• Determine partners' authority

Determine the authority of the partners, so one partner cannot make important decisions or involve partnership into some contract or debt without consent of the other partners.

• Determine mechanism of decision making

It's important to make outline on what types of decisions each partner may make independently , and which ones require a vote or to be agreed with another partner .

• Decide on business management duties

Allocate business management duties among partners in such way that allows each partner to supervise field of the business where he/she has the best competence.

• Determine what time and resources does each partner have to contribute into business management

Decide who is full time, part-time or even a sleeping partner.

• Determine specific responsibilities of each partner

This topic should be clearly outlined in terms to avoid areas that, by an oversight, are out of anyone’s responsibility, or where conflict of responsibilities can appear.

• Agree on procedure of admitting new partners
• Agree on withdrawal or death of a partner
• Decide on ways of resolving disputes

Mediation or arbitration can be advisable alternative for court examination. Get clear on mechanisms of amendment.

• Decide on holidays and illness

Determine arrangements and provisions for the case of long term illness someone of partners and define holidays that each of partners is entitled to.

• Consider what insurances are necessary
• Determine rules of the partnership bank account operating
• Determine how intellectual property rights will be owned and used
• Decide if partners are allowed to have other business interests
• Determine rules of termination

Determine on what grounds the partners can terminate. Determine what can cause automatic termination and how it will influence allocation of assets and liabilities. Agree the rules of getting capital out. Document the rules and reasons for termination.

• Determine post termination restrictions
• Let the lawyers check your sample to ensure that it is alright and go forward with its registration.