A partnership agreement is a contract between two or more people who run a business together, setting out who put in what, how profits are split, who decides what, and what happens when someone wants out. Our free partnership agreement template is for a general partnership: the simple, no-frills version where the partners share the business and its responsibilities. It’s written in plain English so every partner can actually read what they’re signing.
When do you need a partnership agreement?
You need one the moment you and someone else start doing business together for profit, ideally before any money changes hands. The SBA calls partnerships the simplest structure for two or more people to own a business together, and that simplicity is the trap: it’s easy to start one on a handshake and never write anything down.
Say, hypothetically, two friends start a mobile coffee cart. One puts in $12,000 for the cart, the other puts in the hours. Two years later the business is doing well and one of them wants to move across the country. Who owns the cart? Does the leaving partner get paid out, and how much? A partnership agreement answers those questions while everyone is still friends.
When is a partnership agreement the wrong document?
If you’ve formed an LLC, you need an LLC operating agreement, not a partnership agreement. They look similar but govern different things. The SBA’s comparison is blunt: a partnership comes with unlimited personal liability unless it’s structured as a limited partnership, while an LLC protects owners’ personal assets in most cases. Our template assumes a general partnership. If you’re setting up a limited partnership or an LLP, the documents and state filings are different, and a lawyer is worth it.
If one person is simply lending money to the business, a promissory note is cleaner than making them a partner.
What should a partnership agreement include?
Here’s what our sample partnership agreement covers, section by section.
Name, purpose and place of business
The partnership’s name, what the business does, and where it’s based. Keep the purpose broad enough that you won’t need to amend it every time you add a product.
Capital contributions
What each partner puts in: cash, equipment, or other property, with an agreed value. If someone contributes work instead of money, say so, and say how that’s valued.
Profits, losses and draws
How profits and losses are split. The template defaults to percentages you fill in, which don’t have to match contributions. It also covers when partners can take draws (money out of the business) and that partners aren’t employees drawing a salary.
Management and decisions
Who can make day-to-day decisions alone, and which bigger decisions (borrowing over a set amount, taking on a new partner, selling the business) need everyone’s agreement. This is where most partnership fights come from, so be specific.
Duties, time and outside work
How much time each partner commits, and whether partners can run other businesses on the side.
Books, bank account and taxes
One business bank account, shared access to the books, and who handles the tax filings. The IRS explains that a partnership files an annual information return on Form 1065 but doesn’t pay income tax itself; profits and losses pass through to the partners, who each report their share using Schedule K-1.
New partners, leaving, and buyouts
How a new partner joins, how a partner can leave, how their share is valued, and how they’re paid out. The template gives you a valuation method and a payment period to fill in.
Disputes and dissolution
A step-by-step approach to disagreements (talk, then mediation) and what happens if the partnership ends: pay the debts first, then return contributions, then split what’s left.
What do you need to check for your state?
Partnership law is mostly state law, so check a few things where you are. Your state may want you to register the business name if it’s different from the partners’ own names. Your city or county may require a business license. And your state’s partnership statute fills in any gaps your agreement leaves, so it’s worth reading the default rules to see what you’re changing.
Remember the liability point. In a general partnership, the SBA lists liability as unlimited and personal, which means your own assets can be on the line for business debts. If that worries you, look at an LLC or LLP before you sign.
How do you fill in the partnership agreement and get it signed?
- Sit down together and agree on the numbers first: contributions, percentages, decision thresholds, buyout terms.
- Fill in the template and delete anything that doesn’t apply. Add more partner signature blocks if there are more than two of you.
- Each partner reads the full agreement alone before signing. If one of you has a lawyer review it, the other should consider doing the same.
- Everyone signs. E-signing works well here, especially when partners aren’t in the same place, and every partner ends up with an identical signed copy. See how to get a document signed by multiple people for how signing order works.
- Store the signed agreement with your business records and review it every year or two.
Download it, fill in the blanks, and send it for e-signature with any tool you like. (This is the job we’re building SignWren to do; you can join the waitlist.)
This page is general information, not legal advice. For a specific contract or dispute, talk to a lawyer licensed where you are.
Template from signwren.com. General information, not legal advice. Check your state's rules and adapt it before you use it.
This template is for a general partnership. It is not an LLC operating agreement, and it does not create a limited partnership or limited liability partnership. In a general partnership, partners can be personally liable for the business's debts.
GENERAL PARTNERSHIP AGREEMENT
Effective date: [date]
This agreement is between:
Partner 1: [full legal name], of [address]
Partner 2: [full legal name], of [address]
[Add more partners as needed.]
(each a "Partner", together the "Partners").
1. The partnership
The Partners form a general partnership under the law of [State].
Name: [partnership name]
Business purpose: [what the business does, and any related lawful business the Partners agree on]
Principal place of business: [address]
Start date: [date]. The partnership continues until it is dissolved under section 12.
2. Capital contributions
Each Partner will contribute the following by [date]:
| Partner |
Contribution (cash, property or services) |
Agreed value |
| [Partner 1] |
[description] |
[$ amount] |
| [Partner 2] |
[description] |
[$ amount] |
No Partner has to contribute more unless all Partners agree in writing. No interest is paid on contributions. A separate capital account will be kept for each Partner.
3. Profits and losses
Profits and losses are shared as follows:
- Partner 1, [name]: [percentage]%
- Partner 2, [name]: [percentage]%
4. Draws and pay
Partners may take draws against their share of profits ☐ monthly ☐ quarterly ☐ as agreed by all Partners, as long as the business keeps enough cash to pay its bills. Partners are not employees and do not receive a salary unless all Partners agree in writing to a fixed payment amount.
5. Management and decisions
Each Partner has an equal say in managing the business ☐ / Votes are weighted by profit percentage ☐.
Any Partner may make ordinary day-to-day decisions and sign ordinary contracts up to [$ amount].
These decisions need the written agreement of ☐ all Partners ☐ Partners holding [percentage]% of the votes:
- borrowing money or signing any contract over [$ amount];
- buying, selling or leasing real estate or major assets;
- admitting a new Partner;
- changing the business purpose or name;
- selling the business or merging it with another; and
- changing this agreement.
6. Duties and time
Each Partner will devote about [number] hours per week to the business and act in good faith and in the partnership's best interest.
Outside business: ☐ Partners may run other businesses that do not compete with the partnership. ☐ Partners must get the other Partners' written consent before running any other business.
No Partner may use partnership money or property for personal purposes.
7. Bank account, books and records
The partnership will keep its own bank account at [bank name]. Withdrawals over [$ amount] need the approval of [number] Partners.
The partnership will keep complete books and records, which every Partner may inspect at any reasonable time. [Partner name] will handle the partnership's tax filings, and each Partner will receive the tax information they need for their own returns.
8. New partners
A new Partner may join only with the agreement required in section 5 and must sign this agreement (or an amendment to it).
9. Leaving the partnership
A Partner may leave by giving the other Partners at least [number] days' written notice.
A Partner is also treated as having left if they die, become permanently unable to take part in the business, or go bankrupt.
10. Buyout
When a Partner leaves, the remaining Partners may ☐ buy the leaving Partner's interest ☐ choose to dissolve the partnership.
The value of the leaving Partner's interest will be ☐ their capital account balance ☐ their percentage of the business's fair market value as set by an independent appraiser the Partners agree on ☐ [other method].
The buyout price will be paid ☐ in full within [number] days ☐ in [number] equal installments over [number] months, with interest at [rate]% a year.
The leaving Partner remains responsible for their share of partnership debts incurred while they were a Partner, and the remaining Partners will use reasonable efforts to have the leaving Partner released from those debts.
11. Disputes
If the Partners disagree, they will first try to resolve it by talking in good faith for at least [number] days. If that fails, they will try mediation with a mediator they agree on, sharing the cost equally, before going to court.
12. Dissolution
The partnership will end if all Partners agree in writing, if only one Partner remains and chooses not to continue, or as required by law.
On dissolution, the Partners will wind up the business, sell or distribute its assets, and use the money in this order: pay the partnership's debts (including any owed to Partners other than capital), return each Partner's capital account balance, and split anything left according to section 3.
13. General terms
Notices. Notices must be in writing and sent to each Partner's address above (or a new address given in writing), by mail, hand delivery or email.
Entire agreement. This is the whole agreement between the Partners about the partnership.
Amendments. Changes must be in writing and signed by all Partners.
Governing law. The law of [State] governs this agreement.
Severability. If any part of this agreement is found unenforceable, the rest stays in effect.
Electronic signatures and counterparts. The parties agree this agreement may be signed electronically and in counterparts, and an electronic signature has the same effect as a handwritten one.
Signatures
Partner 1
Signature: ______________________________
Name: [full name]
Date: [date]
Partner 2
Signature: ______________________________
Name: [full name]
Date: [date]