Partnership Agreement FAQs

What is the purpose of the partnership?

It often helps to think in terms of what will absolutely be covered vs. exclusions, meaning is there anything we absolutely don’t want to handle? For instance, as an attorney I often have to be specific that I cannot handle tax matters. What exclusions apply to your business?

How will profit and losses be split?

Is this equal to ownership interest? Did someone contribute more in terms of sweat equity, capital or invaluable knowledge, expertise, training or know-how? It is important that both parties have a good understanding of the value each person is assigning to certain contributions. Otherwise, the parties may later have resentment when the discrepancy in value of contributions is brought to light.

How will decisions be made?

If there are only two parties, what happens when you disagree? I typically recommend that this is determined on certain areas of expertise. Essentially, the final say on specific topics in decision making should lie with the party that has the most specialty in that area. What areas of expertise are your specialty versus that of your partners?