The following list of subjects are often covered in Partnership or Operating Agreements. It will help you identify the things to learn more about to consider for inclusion in your agreement.
- Name of Partnership & names of individual partners
- Term of partnership
- Purpose of partnership; the type of business to be conducted
- Personal business goals of the partners and partnership
- Cash and property contributed to start the business
- What happens if more cash is needed
- Skills to be contributed (hours to be worked, work duties of partners, management roles, possible other business activities, etc)
- How profits will be distributed
- How losses will be divided
- Salaries, guarantees or drawing accounts
- Withdrawals of contributed assets/capital by a partner
- Duties of partners, acts expressly restricted or authorized by partners
- General Management provisions (including power to borrow money)
- Expense accounts
- Accounting and checking rules and procedures
- Disputes (rule by majority voting, provision for arbitration or mediation, etc)
- Sale, assignment, etc of a partnership interest
- Admission of new partners
- Removing of a partner
- Continuing business if a partner withdraws, dies, becomes disables or retires
- Determining a value of a departing partner's interest, provisions for payment of that interest
- Dissolution, winding up and termination of the partnership and/or the business
Give some thought to all these areas before sitting down with an attorney to draw up the agreement. The dialogue between the partners will be very healthy and the process much more efficient with your legal counsel.
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