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• What is a Partnership? A "Partnership" is an association of two or more individuals or business entities (such as corporations, limited liability companies, or trusts) to carry on a business or investment activity. The distinguishing feature of partnerships is that the partners remain personally liable for the debts of the partnership. A partnership agreement can written or oral in most, however, it is highly recommended that one create a written partnership agreement.
  
  
• General v. Limited. A standard partnership is know as a "general partnership". A variant of the standard partnership is the "Limited Partnership" wherein one or more partners acts as the "general partner" and remains liable for all partnership debts and manage the business affairs of the partnership. The remaining partners have the status of "limited partners" and are not liable for partnership debts. In most states, limited partners are prohibited by law from engaging in managerial decision of the partnership. Another distinction between limited and general partnerships is that general partnerships can be formed merely by the execution of a partnership agreement; whereas, limited partnerships must file articles of organization with a state office (or foreign government if formed under the laws of a country outside the United States). Note: a general partnership may not have "limited partners". Our partnership agreement form is for general partnerships.
  
  
• Features of our Partnership Agreement Form. A Partnership Agreement is a contract between the partners that controls the operation of the partnership and the rights of all partners. Our form system contains the following features for creation of a General Partnership Agreement:
  1. Allows user to select duration of partnership;
  2. Allows user to name up to 10 partners with their required initial capital contributions;
  3. Allows user to select state whose's laws govern the partnership agreement;
  4. Allows user to designate how profits and loss of the partnership shall be allocated among the partners;
  5. Allows user to select weight to be given to each partner's vote (i.e., all partner vote weighted equally, partner votes weighted by capital account, etc.);
  6. Allows user to indicate and describe required services and non-cash capital contributions that each partner is to provide to the partnership (if any);
  7. Allows user to name Tax Matters Partner; and
  8. Allows user to restrict sale of partnership units to persons outside the ownership group and select from several options regarding how to handle partner death, withdrawal, and removal.
• Division of Profits and Losses of the Partnership. We give our users three options for allocating profits and losses of the partnership among the partners in the agreement: (a) assigning a fixed profit / loss percentage to each partner, (b) using a formula to allocate profits and losses to the partners, and (c) deferring division of profits and losses for a vote of the partners at the end of each year. If you are assigning partnership profit / loss percentages to each partner, the total must add up to 100%: i.e., Partner A--40%, Partner B--40%, and Partner C--20%. In this example, were the partnership to have net income of $70,000 in a year, Partner A's allocation of that income would be $28,000 (i.e., $70,000 x 40%).
  
  
• Our form is well-suited to the formation of a small business partnership.
  
  Links to Additional Information:
• California limited partnership information from the California Secretary of State's Office
• Partnership Law, an overview from the Legal Information Institute
• Choice of business entity (including partnerships) from the Missouri Bar Association