Can I add a non-equity partner?

Yes — sometimes called a "salaried partner" or "of counsel". They have a partnership title but no ownership stake. Document this clearly to avoid implied-equity claims later.

What if one partner stops contributing work?

This is the most common partnership dispute. Address it upfront with explicit performance expectations and a removal mechanism. Consider a vesting schedule for capital — partners earn their share over time, not on day one.

Partnership Agreement

Defines the terms between two or more business partners — capital, profits, decisions, exit.

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PARTNERSHIP AGREEMENT

This Partnership Agreement ("Agreement") is entered into as of May 4, 2026 by and among the following persons (each a "Partner" and collectively, the "Partners"):

Partner 1: Jane Doe
Initial capital: $50,000.00 (50.00%)
Partner 2: John Smith
Initial capital: $50,000.00 (50.00%)

TOTAL INITIAL CAPITAL: $100,000.00

The Partners agree to operate a partnership under the name "Smith & Doe Consulting" (the "Partnership") on the following terms.

1. PURPOSE
The Partnership is formed for the following business purpose:
Provide management consulting services to mid-market technology companies, with a focus on go-to-market strategy and operational efficiency.

2. CAPITAL CONTRIBUTIONS
Each Partner has contributed the capital shown above. Additional capital contributions may be made only with the written consent of all Partners.

3. PROFITS AND LOSSES
Net profits and losses shall be allocated to each partner in proportion to their capital contribution.

4. MANAGEMENT AND VOTING
All decisions of the Partnership require the unanimous written consent of all Partners.

5. PARTNER COMPENSATION
No Partner shall receive a salary for services rendered to the Partnership unless approved in writing by the other Partners. Partners may, however, be reimbursed for ordinary business expenses incurred on behalf of the Partnership.

6. BANKING AND BOOKS
The Partnership shall maintain a separate bank account in its name. Books shall be kept according to standard accounting practice and shall be open to inspection by any Partner at all reasonable times.

7. ADMISSION OF NEW PARTNERS
No new Partner may be admitted without the unanimous written consent of all existing Partners. Any new Partner shall execute a written joinder to this Agreement.

8. WITHDRAWAL OF A PARTNER
A Partner may withdraw upon 90 days' written notice. The withdrawing Partner shall be paid the value of their capital account as of the withdrawal date, paid over 24 months unless otherwise agreed.

9. DEATH OR DISABILITY
Upon the death or permanent disability of a Partner, the Partnership shall not automatically dissolve. The remaining Partners shall purchase the affected Partner's interest at fair market value, paid over 24 months.

10. DISPUTE RESOLUTION
The Partners shall first attempt to resolve any dispute through good-faith negotiation. If unresolved within 30 days, the dispute shall be submitted to mediation, then to binding arbitration in accordance with the rules of the American Arbitration Association.

11. DISSOLUTION
The Partnership may be dissolved by unanimous consent of the Partners. Upon dissolution, assets shall be liquidated, debts paid, and remaining proceeds distributed to Partners in proportion to their capital accounts.

12. GOVERNING LAW
This Agreement is governed by the laws of the State of Delaware.

13. ENTIRE AGREEMENT
This Agreement is the entire understanding between the Partners and supersedes all prior agreements. Amendments require the written consent of all Partners.

IN WITNESS WHEREOF, the Partners have executed this Agreement as of the Effective Date.

_____________________________ Date: ____________________
Jane Doe

_____________________________ Date: ____________________
John Smith

About this template

A partnership agreement is the most important document two business partners can sign — and the one most often skipped. Without a written agreement, partnerships default to your state's Uniform Partnership Act rules, which say things like "all profits split equally" and "any partner can bind the partnership to debts" — surprises you don't want when something goes wrong. The four clauses that prevent the most fights: (1) capital + profit-split rules made explicit, (2) decision-making process (unanimous vs. majority vs. mixed), (3) what happens when a partner wants out (90-day notice + buyout terms), and (4) what happens on death or disability. Partnerships almost never fail because of money — they fail because of unspoken expectations. Write them down before you take in a single dollar of revenue.

When to use it

Forming any partnership before doing business together.
Two or more co-founders launching a venture not formally incorporated as an LLC or corporation.
Adding a partner to an existing business.
Even between family members or close friends — especially then.

What to include

Each partner's name + initial capital contribution.
Profit/loss allocation rule (pro-rata, equal, or custom).
Voting/decision-making process.
Withdrawal terms with notice period and buyout schedule.
Death/disability provisions.
Dispute resolution procedure.
Governing law.

Frequently asked

For most cases, yes. An LLC offers liability protection a general partnership doesn't. The cost is ~$100-300 to file plus annual fees. Use a partnership agreement only when you genuinely want a partnership structure or are bootstrapping before LLC paperwork.

⚠ Legal disclaimer. This template is provided for informational purposes only and is not a substitute for legal advice from a qualified attorney. Always consult a licensed professional before using this document for any binding agreement.