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What Does a Business Partnership Agreement Cover?

When it comes to business, Verbal or Oral agreements are seldom found to work out. In order to protect your business, the most intelligent thing that you need to do is write down the terms of the partnership. When you mention every right and responsibility with the help of a written partnership agreement, you can be equipped better to take care of any conflict – as and when it arises. In the absence of a written contract, there is also the risk that many of your business aspects will be controlled by the laws of your state. Here is what a business Nevada partnership can cover.

Name of partnership

This is one area that is covered by every partnership agreement. You may use either your own last name – as is the case with Smith & Wesson and other popular business partnerships. A made-up name can also be used, if you want. If you intend to make a name, you have to ensure that it is not in use already. Then, you have to file a statement in the name of your fictitious business with the clerk of your county.

Role of each partner

When you have a proper partnership agreement, it can be useful in many varied ways for your business. It can clearly define the role of each partner in the organization, and help structure the overall relationship in such a way that can be appropriate for your own business. In this contract, you may define how the losses and profits will be shared by you as well as your partners, the kind of guidelines that you as well as your business partners deem as vital and what would occur in case any of the partners walks out of the business.

Partnership contributions

The contributions to the partnership happen to be another important area that is covered by these types of agreements. It is essential for you as well as your partners to write about the contributions and give consent to who would contribute to the business in terms of services, property and cash. The percentage of ownership of each partner must also be agreed on. Partnerships not outlining all such terms fall apart upon disagreements regarding the role of each partner. You can find a partnership agreement sample that contains an important section related to partner contributions.

Allocation of profits, losses etc.

The allocation of draws, losses and profits is another important area that is covered by most of the partnership agreements. It is one of the most vital areas that shows how successful a business partnership is. The agreement must make these points clear:

  • How the profits and losses would be allocated?
  • Will the profits and losses be allocated on the basis of the ownership percentage of each partner in the business?
  • How the distribution of profits will be done, and when?

Each partner in a business must pay close attention especially to these terms, which they agree to.

There are plenty of reputable websites where you can find many partnership agreements at a low cost, with no need to hire an attorney. These sites have partnership agreements which can be appropriate for any type of business partnership, along with guidance notes that are completely explanatory. Many of these sites are also ready to create one that suits your specific requirements.

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