Business Partnership Agreement Template
A business partnership agreement sets out who contributes what, who decides what and how the partners split profits. This page gives you a free two-partner template to download in Word and PDF, plus a plain-language guide to each clause.
Written terms matter most when the partnership gets tested: a disagreement over money, a partner who wants out or a death. Agreeing on those points early takes an afternoon, but skipping it can cost the business flat-out more later.
What is a Business Partnership Agreement?
A business partnership agreement is a legal document that records each partner’s role, responsibilities and financial contribution. This contract is usually signed by two or more business owners who run a business together and share its profits.
The agreement covers capital contributions, profit and loss shares, decision making, dispute resolution, amendments and how a partner leaves. Writing these terms down won’t remove every disagreement, but it settles most arguments about who agreed to what.
Without an agreement, state default rules fill the gaps, and those rules may not match what the partners intended. In states that follow the Revised Uniform Partnership Act, for example, partners share profits equally unless they agree otherwise (Iowa Code 486A.401), even when one partner put in most of the money. Other states differ, so check your own state’s partnership statute.
DISCLAIMER: We are not lawyers or a law firm and we do not provide legal, business or tax advice. We recommend you consult a lawyer or other appropriate professional before using any templates or agreements from this website.
When to Use a Business Partnership Agreement Template
Use a business partnership agreement template when two or more people go into business together and plan to share profits, ideally before any money changes hands. It suits small businesses, startups and professional practices in any industry, and it’s a good starting point if you aren’t familiar with legal language.
A template gives you the framework and lists the clauses that matter, so you only fill in the details. Three examples show how it works.
Two friends opening a bakery can state who manages supplies, who bakes and how profits are shared. An artist working with a gallery owner can set the percentage of sales each side keeps and who pays for marketing, exhibitions and transport of the artwork. Two real estate developers on a joint venture can settle profit sharing, capital contributions, property acquisition and how losses are handled.
What Types of Partnership Agreements Are There?
The three most common types are general, limited and limited liability partnership agreements. In a general partnership, all partners manage the business and share its profits and losses. A limited partnership has at least one general partner who runs the business and one or more limited partners who invest money without taking part in management. A limited liability partnership (LLP) is registered with the state and changes how far partners are personally responsible, and the rules depend on the state.
This template is a general partnership agreement for exactly two partners. A limited partnership or an LLP needs state registration and extra terms for the different partner classes, so ask a lawyer before adapting it.
Is a Written Partnership Agreement Required?
A written agreement isn’t needed to form a partnership, because an express agreement isn’t required to create one (Cornell Legal Information Institute). Writing it down still matters, since your state’s default rules decide how profits split and who manages the business when the partners haven’t said otherwise.
Download our Partnership Agreement
Operating a partnership without written terms leaves the partners relying on state default rules and on memory. This simple template gives you a written starting point.
Click below to get a copy of our template today.
What to Include in a Partnership Agreement Template
A partnership agreement works when each partner knows their role and what the others owe. Vague terms leave room for disagreement later, so the document should answer the same set of questions every time.
The six items every partnership agreement should include are the partners and business details, each partner’s capital contribution, the profit and loss split, management and voting rules, the dispute resolution method and the terms for a partner leaving or the partnership ending. The sections below cover each clause in the template, what to decide for it and where the template leaves a blank for you to fill in.
Business Information
Start with the legal name of the business, its type (for example a general partnership or an LLC), its business address and its main purpose. The purpose clause sets the boundaries of the partnership, so write it broadly enough to allow growth but narrowly enough to keep partners from drifting into unrelated ventures.
For a tech startup, that means stating the company name, address and the fact that it develops software.
Partner Information
List each partner’s full name, address and contact details. Add a sentence on what each partner brings, whether that’s expertise, money or a network of clients.
Recording the reason a partner joined makes later disputes about roles easier to settle. A partner who joined for an industry network, for example, shouldn’t be expected to run the books.
Timeline
State when the partnership starts and how it ends. The template begins the partnership on the date of signing and lets it continue until termination, and it leaves the termination clause blank for you to complete.
Some partnerships run indefinitely, ending only when a partner retires or dies or a goal is reached. Others have a fixed end date. Choose one and write it down so no partner has to guess.
Capital Contributions
Capital contributions are what each partner puts into the business at the start, and the agreement should list every one of them. Include cash, property and services, give each a value and note any contributions expected later.
Contributions also affect ownership. If Partner A contributes $70,000 and Partner B contributes $30,000, the agreement can state that Partner A owns 70% and Partner B owns 30%. The template uses a table where you enter each partner’s contribution, a description and its value, and it ties the profit split to those values.
Roles & Responsibilities
Define who makes day-to-day decisions, who manages employees and who handles the money. In a software firm, one partner might lead the technical work while the other runs sales and customer relations.
Responsibilities should match the roles. Naming them keeps each partner accountable and lets the others see when something is falling through.
Admitting New Partners
Add a clause that explains how new partners are admitted, since growth often means bringing someone in. Decide whether admission needs unanimous consent or a majority vote, and state what the new partner contributes and what share they receive.
The template takes the strictest route: it says no new partners may be added. Change that clause if you expect to expand the partnership.
Amendments to the Agreement
Specify how the agreement can be changed. Partners usually require either unanimous agreement or a majority vote for amendments, and the change should be in writing.
The template requires amendments to be in writing and signed by both partners. A clear amendment process keeps the agreement current as the business changes.
Dispute Resolution
A dispute resolution clause names the process partners follow before going to court. Mediation brings in a neutral person to help the partners reach a deal, and arbitration has an arbitrator decide, which is usually faster and cheaper than litigation.
The template leaves the method (arbitration, mediation or negotiation) and the governing law blank. Fill in both, and add the city where any hearing takes place.
Withdrawal or Death
Set out what happens when a partner leaves or dies: whether the business continues or dissolves, how the departing partner’s share is valued and how it is paid.
The template covers death by letting the surviving partner buy the deceased partner’s interest from the heirs or end the partnership. It doesn’t say how that interest is valued, so add a valuation method and payment terms before you sign.
Dissolution
Dissolution is the process of ending the partnership, and the agreement should list what triggers it, such as a partner’s retirement or the end of a project. It should also describe winding up: paying debts, settling accounts and dividing the remaining assets.
Add a rule for the case where partners disagree on dissolving, for example mediation first or a set formula to buy out one partner’s interest.
Voting Rights
Voting rights are usually proportional to each partner’s share in the business, but you can set them equally regardless of contribution. Decide which decisions need unanimous consent and which need only a majority.
The template has a blank line for voting weight, so write the rule in plain terms, such as one vote per partner or votes in proportion to capital.
Profit & Loss Distribution
The profit and loss clause decides how the money is split. Profit and loss can be shared equally, in proportion to capital contributions or by hours worked, and the agreement should also say how often distributions are paid and what happens in a loss year.
The template ties profits and losses to each partner’s capital contribution value, as worked out by the appointed accountants at the end of every fiscal year. It sets no interest on capital payments, and it requires the other partner’s written consent before anyone borrows money from the business.
Tax & Accounting Information
Name who keeps the books and files the taxes, and set the fiscal year end and the date financial reports are due. Add a clause that lets each partner inspect the records on request.
The template requires a financial statement at the end of every fiscal year showing income, expenses and each partner’s share of the profits.
Signatures
Partnership clauses are guidelines, not fixed rules. Adjust the template to the way your business actually runs, and have a lawyer review it if a lot of money is involved.
What Should a Buyout and Deadlock Clause Cover?
A buyout clause should say who may buy a departing partner’s share, how the share is valued, when payment is due and how a deadlock is broken. Valuation can follow a fixed formula, an agreed yearly figure or an independent appraisal, and whichever you pick should be written down.
For a 50/50 partnership, name a tie-breaker such as mediation followed by arbitration, so a split vote doesn’t freeze the business. The template gives the surviving partner a purchase right on death but leaves the valuation open, so complete that part yourself.
How Do You Fill Out the Partnership Agreement Template?
Fill out the template in five steps, working from the top of the document down. The template is a free download in Word and PDF, so you can edit it in Word or print the PDF and fill it in by hand.
- Enter the effective date and the names and addresses of both partners in the parties section.
- Write the partnership purpose and business location, then list each capital contribution with a description and value.
- Complete the blank clauses for voting weight, management, termination and the dispute resolution method and law.
- Check the clauses that are already filled in, such as no interest on capital, profits split by capital contribution value and no new partners, and change any that don’t match your deal.
- Add the governing law, then have both partners sign and date the document.
How Is a Partnership Taxed?
A partnership doesn’t pay income tax itself. It files an annual information return and passes profit and loss through to the partners (IRS). Generally, a domestic partnership files Form 1065 by the 15th day of the 3rd month after its tax year ends, which is March 15 for calendar-year partnerships, and it can request an extension with Form 7004 by that regular due date (IRS Instructions for Form 1065).
The partnership also gives each partner a copy of Schedule K-1, which shows that partner’s share. A tax professional can tell you how your state treats partnership income.
Can You Sign a Partnership Agreement Electronically?
Yes, partners can sign a partnership agreement electronically, because federal law says a signature or contract can’t be denied legal effect, validity or enforceability solely because it’s in electronic form (15 U.S.C. 7001(a)). That rule applies to transactions in or affecting interstate or foreign commerce, and state law can add its own requirements.
To sign with Signaturely, download the template, fill it out, upload the PDF, place the signature and date fields for both partners and send it. Signaturely’s free plan covers 1 document per month after the 7-day trial.
Tips for How to Write a Business Partnership Agreement
Five habits make a partnership agreement easier to write and easier to live with.
- Talk first. Discuss roles, money and exit plans with your partner before you write anything, so the document reflects what you both expect.
- Use plain language. Keep sentences short, and define any legal term you can’t avoid instead of leaving it to interpretation.
- Be specific. Put numbers, dates and names in the document so there’s nothing to interpret later.
- Plan for change. Add clauses for new partners, buyouts and amendments, because businesses evolve.
- Sign electronically. An e-signature tool such as Signaturely collects both signatures in one flow and keeps a record of when each was added.
Download our Business Partnership Agreement
Operating a partnership without written terms leaves the partners relying on state default rules and on memory. This simple template gives you a written starting point. Choose the Word version to edit it or the PDF version to print it.
Click below to get a copy of our template today.
FAQs About Business Partnership Agreements
Below are some of the common questions people have about partnership agreements.
Yes, you can. While getting legal advice is a good idea for complex partnerships, many straightforward agreements can be self-drafted using templates and guidelines.
A simple partnership agreement should include basic details like business information, business partner roles and responsibilities, capital contributions, profit & loss distribution, and provisions for disputes, amendments, and dissolution.
Forming a partnership involves discussing and agreeing on the terms of the partnership, writing and signing a partnership agreement, and registering the partnership with the appropriate government agency.
The simplest form is a general partnership where two or more partners share responsibilities, profits, and liabilities equally.
When signed by all parties, a partnership agreement is legally binding. It can be used in court to resolve disputes. However, the enforceability of specific sections within the contract may vary depending on your state’s regulations.
While starting a partnership without a contract is possible, it’s not advisable. A partnership agreement provides clarity, sets expectations, and protects all partners.
What You Need to Remember About Partnership Agreement Templates
Business Partnership Agreement Template
Business Partnership Contractual Agreement
PARTIES
- This Business Partnership Contractual Agreement (hereinafter referred to as the “Agreement”) is entered into on ________________ (the “Effective Date”), by and between ________________________, with an address of ________________ (hereinafter referred to as the “First Partner”) and ________________with an address of ________________ (hereinafter referred to as the “Second Partner”) (collectively referred to as the “Partners”).
PARTNERSHIP PURPOSE
The Partners agree that the purpose of this partnership is ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
TERM
- The Partners agree that the partnership will begin on the date of signing this Agreement and will continue until its termination.
BUSINESS LOCATION
The Partners agree that the location of the business will be at ________________________ and any change to the location of the business will only occur by providing an attached amendment to this Agreement signed by the Partners.
NEW PARTNERS
The Partners agree that no new partners may be added to this Agreement and partnership.
CAPITAL CONTRIBUTIONS
- The Partners agree to the following capital contributions in case or in property or other forms of contributions.
Partner | Contribution Description | Value |
INTEREST
- The Partners agree that there will be no interest on any capital payment by either of the partners including any additional capital contributions made.
PROFITS AND LOSSES
- The Partners agree that the appointed accountants will be responsible to determine the profits and losses of the partnership.
- The profits and losses will be determined in accordance with the Partners capital contribution values as examined and deduced by the appointed accountants at the end of every fiscal year.
BORROWING OF PARTNERSHIP INTERESTS
- The Partners agree that no money will be borrowed from the business without the prior written consent of the other partner.
FINANCIALS STATEMENTS
- The Partners agree to provide a financial statement at the end of every fiscal year showing the income and expenses of the business indicating and providing each partner’s share of the profits.
VOTING
The Partners agree that their voting weight is determined as follows: ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
MANAGEMENT
- The Partners agree that the business will be managed as follows:
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Meetings
- The Partners agree that meetings will occur at the headquarters of the Partnership or in any other place as agreed by the Partners.
Calling of Meetings
- The Partners are entitled to call for a meeting by providing a reasonable notice beforehand.
DEATH
- The Partners agree that in case of death of either of the partners, the surviving partner will be entitled to purchase the interest of the decedent in the partnership from the heirs and/or assigns.
- The Partners also agree that the surviving partner will be entitled to terminate this Agreement and partnership.
TERMINATION
- The Partners agree that this Agreement and partnership may be terminated as follows _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
AMENDMENTS
- The Partners agree that any amendments made to this Agreement must be in writing where they must be signed by both Partners to this Agreement.
- As such, any amendments made by the Partners will be applied to this Agreement.
SEVERABILITY
In an event where a provision of this Agreement is found to be void and/or unenforceable by a court of competent jurisdiction, then the provisions remaining will continue to be enforced.
DISPUTE RESOLUTION
- Any dispute and/or difference arising out of or related to this Agreement will be submitted to ________________ (Arbitration/mediation/negotiation) according to, and subject to the laws of ________________.
GOVERNING LAW
- This Agreement will be governed by and construed according to the laws of
ENTIRE AGREEMENT
- This Agreement is complete and with respect to the subject matter herein, supersedes all and any prior agreements, understandings, and conditions, expressed or implied, written or oral, of any nature with respect to the subject matter herein.
- The expressed terms control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms herein.
Signature And Date
The Partners hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated throughout their signatures below:
FIRST PARTNER
SECOND PARTNER
Related Proposals and Templates
Download our Business Partnership Agreement
The implications of not using a business partnership agreement with partners can be catastrophic to your business. That’s why we’ve created a simple template to help protect your business.