Understanding the Importance of a Partnership Agreement Form

If you’re going into business with someone chances are you’re going to need to have a partnership agreement form drafted. This is basically a legally binding document that will in detail go over how your partnership will be managed throughout the longevity of your business. While you may feel that you trust your partner, or there is no need for these forms you should really reconsider. Having these forms in place does not mean that you don’t trust the person you’re going into business with, it simply protects you, your partner, and the business in the event that something should happen. Not having these important forms in place could really lead to problems such as disagreements, conflicts, and even lawsuits. There are many cases in which people have gone into business together and later broke apart. You should want to be protected at all cost, and your partner should understand that and want the same thing.

Another beneficial reason to have a partnership agreement form in place is to avoid having the government run your business. Most people get these forms simply so they don’t have to govern their business based on their state’s rules about partnership operation. Filing these forms allows business partners to run by their own rules and not someone else’s.

If you’ve never had a partnership agreement form, you may not be aware of what it should read. They don’t have to be long drawn out legal documents that no one understands, they can be very simple in creation. However, when drafting your agreement you must make sure that it is understandable to your partner and in the off chance things go sour, the judge as well. There are some things that all agreement forms should have such as management details, as well as the break down of ownership. It should also contain profit percentages for each partner, as well as how conflicts or disagreements will be resolved if necessary.

Other important information that should be included on your partnership agreement form is the names of everyone involved in the partnership, company names and trade names, as well as the length of time for which the partnership should run. You also want to have mapped out what each person will contribute and invest in the business. Finances are important so you also need to include how any profits or losses will be divided, salary to be paid, terms for ending the partnership, and if outside business is allowed.

All of this can be overwhelming and seem like a lot of information that needs to be put on your partnership agreement form. If you are one who has found yourself unable to draft up an accurate form then you should consider purchasing a template. There are websites available that create these forms for you with the legal information already populated in. You can usually download them after payment and either use the forms as they are or edit them to your liking. However you create your forms, this is one form that should not be left out.