What is a Small Business Partnership Agreement?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 23 November 2019
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A small business partnership agreement is a document through which parties agree to own a business jointly. This type of agreement spells out the rights and responsibilities of each partner as well as the money each partner will invest and the percentage of the business income each will receive. A small business partnership agreement often details how the partners will run the business, how they will make changes, and how the business will be dissolved if desired. Often, these agreements also include details about the dispute resolution processes the partners will use to deal with problems.

A small business partnership agreement is a contract that spells out the agreement between parties who agree to go into business together. This contract typically includes details about the type of business the partners will run together, the name of the business, and where it will be located. It usually details the investment the partners will make as well. Interestingly, however, partners may not always invest money. In some cases, a partner’s investment may be in the form of assets, skills, or work, despite the fact that other partners may commit to investing cash. Each partner’s investment is usually assigned a value in a small business partnership agreement.


In most cases, a small business partnership agreement also details how future contributions to the business will be made. This type of agreement may also stipulate how the profits and losses from the business will be assigned. Likewise, it may list each partner's responsibility for the day-to-day operation of the company as well as the distribution of liability in the event something goes wrong.

Often, people think of a small business partnership as an agreement made between two people, but this isn’t always the case. A partnership may be made between several people. In fact, a small business partnership can even be established between two or more small businesses rather than individuals.

Since a small business partnership agreement is a contract a court may agree to enforce, an individual may do well to avoid signing one without reading it and asking questions. In fact, seeking legal advice may help a person gain greater confidence in the fairness of this type of agreement. A general lawyer may agree to review a small business partnership agreement, but an experienced small business lawyer or an attorney who specializes in contract law may be particularly suited to the task.


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