Partnership agreement builder

Template only - not legal advice. Partnership law and liability exposure vary by structure (general partnership, LLP, LP) and state. Consider whether an LLC might better serve your liability protection needs, and have this document reviewed by a business attorney before signing. See our full disclaimer.

1. Partnership information

Partnership name

Partnership type

State of formation

Agreement effective date

Business purpose

2. Partners and ownership

Partner name(s) and ownership percentage List one partner per line with their ownership percentage. Percentages should total 100%.

Initial capital contributions

3. Management and decision-making

Day-to-day management

Managing partner name (if applicable)

Voting threshold for major decisions

4. Profit, loss, and compensation

Profit and loss allocation

Distribution schedule

Partner salary / draw policy

5. Withdrawal, death, and buyout

Notice period for a partner to voluntarily withdraw

Buyout terms if a partner withdraws, dies, or becomes incapacitated

6. Dispute resolution and dissolution

Dispute resolution method

Non-compete for departing partners

Your partnership agreement

Get a business attorney review

A business attorney reviews your partnership agreement for completeness, confirms whether a general partnership or LLP structure best fits your liability exposure, and can advise if an LLC might serve you better.

What's the difference between a general partnership and an LLP?

In a general partnership, every partner has unlimited personal liability for the partnership's debts and obligations - including liability for another partner's negligence or misconduct in the course of business. This is a significant risk that many business owners don't fully appreciate until it's too late.

A limited liability partnership (LLP) - available in most states, particularly common for professional service firms like law and accounting practices - shields partners from personal liability for the negligence or misconduct of other partners, while each partner remains liable for their own actions. LLP status typically requires a specific state filing beyond just having a partnership agreement.

Given the liability exposure of a general partnership, many business owners are better served by forming an LLC instead - use the business entity selector to compare, since a multi-member LLC can offer similar flexibility with better liability protection for most situations.

What happens without a written partnership agreement?

Every state has a default partnership law (typically based on the Uniform Partnership Act or Revised Uniform Partnership Act) that governs partnerships without a written agreement. These default rules generally split profits, losses, and management authority equally among partners - regardless of how much capital or work each partner actually contributed.

Default rules also typically allow any partner to bind the partnership to contracts within the ordinary course of business, and can trigger automatic dissolution upon a single partner's withdrawal or death unless the partnership agreement specifies otherwise. These default outcomes are rarely what business partners would actually choose if given an explicit decision.

What should partners negotiate before signing?

Capital contribution and profit-sharing arrangements that reflect actual contribution (not necessarily equal splits if partners bring different amounts of capital, time, or expertise), decision-making authority for day-to-day operations versus major decisions, a clear buyout mechanism and valuation method for departures, and a dispute resolution process that avoids expensive litigation between partners who need to keep working together.

If you're comparing this structure against an LLC, see the LLC operating agreement builder for a side-by-side sense of how similar governance provisions look in that alternative structure.

Frequently asked questions

No - a general partnership can technically be formed just by 2 or more people agreeing to conduct business together for profit, even without any formal filing or written agreement (this is sometimes called an "accidental partnership" and can happen unintentionally). However, operating without a written agreement means you're entirely subject to your state's default partnership law, which - as described above - rarely matches what partners would have actually chosen. A written agreement is strongly recommended for any partnership beyond the most casual, short-term arrangement.

In a general partnership, yes - this is one of the most significant risks of the structure. Each general partner has "joint and several liability" for partnership obligations, meaning a creditor or plaintiff can pursue any partner individually for the full amount, even if that partner had nothing to do with the underlying issue. This includes liability for another partner's negligence, contracts they entered on behalf of the partnership, and debts they incurred. An LLP structure specifically addresses this risk for the negligence/misconduct category, which is why professional service firms frequently choose LLP status over a general partnership.

Without a written agreement addressing this, a partner's withdrawal can trigger automatic dissolution of the entire partnership under many states' default rules - meaning the business technically ends and must be wound up, even if the remaining partners want to continue operating. A well-drafted partnership agreement typically specifies that the partnership continues despite a partner's withdrawal, with the remaining partners having the option (not obligation) to buy out the departing partner's interest at a specified valuation, avoiding the disruption of automatic dissolution.

Partnerships are pass-through entities for federal tax purposes - the partnership itself doesn't pay income tax. Instead, profits and losses pass through to partners according to the allocation specified in the partnership agreement (or equally under default rules), and each partner reports their share on their personal tax return via Schedule K-1, regardless of whether the profit was actually distributed in cash. This "phantom income" issue - being taxed on profit you haven't actually received in cash - is an important consideration when setting distribution policy, since partners need enough actual cash distributed to cover their resulting tax liability.

Many partnerships, particularly professional service firms, include a reasonable non-compete or non-solicitation provision for departing partners to protect client relationships and prevent a partner from immediately competing using knowledge and relationships built during the partnership. Enforceability follows the same state law rules that apply to other non-competes - unreasonable duration, scope, or geographic reach can render the provision unenforceable, and a handful of states restrict or ban non-competes entirely. Use the non-compete enforceability checker to assess whether a specific provision is likely to hold up in your state.