Secure the Deal with a Partnership Agreement Lawyer

What Is a Partnership Agreement?

If you recently started a business partnership, you need a partnership agreement that guides business operations to avoid conflicts. A partnership agreement lawyer helps ensure your agreement is legal and fair to all parties involved.

You can categorize partnerships into:

General Partnerships

These are the simplest partnership forms and make up a majority of partnerships. A general partnership is an agreement between two or more people to run a business as co-owners. Each partner usually has equal shares in the company’s profits and losses. The partners manage the business and assume responsibility for the company’s debt.

Limited Partnership

In a limited partnership, the partners do not take part in management roles and are not liable for any partnership debt beyond their capital contribution. Typically, limited partners only serve as investors in the partnership.

Limited Liability Partnership

An LLP is a partnership where partners are free of personal liability regarding business debts or a partner’s action. This means you cannot lose your assets for legal action against the business.

The laws for LLC partnership vary from state to state. For example, in some states, only licensed professionals, such as accountants, doctors, and lawyers, can form an LLC partnership.

Laws Governing Partnership Agreements

Rules partners set, and the laws of the state guide these partnerships. Often, the partners’ rules overrule and differ from state laws. This means partners are free to share the profit based on whatever formula they come up with regardless of what the state stipulates.

Taxing Business Partnerships

In the U.S., all partnerships operate under pass-through taxation. This means the business itself does not pay taxes. Instead, the tax responsibility passes to the individual partners, and the income is taxed only once.

Partners must file Schedule K-1 and Form 1065 during tax season. These documents detail the partnership’s profits, losses, deductions, and expenses. Working with an attorney ensures accuracy and compliance in preparing these forms.

Putting the Partnership Agreement in Writing

Unlike verbal agreements, written partnership agreements are not subject to memory loss. Apart from the written partnership agreement being a legally binding document, you can also refer to it if a disagreement arises. Writing also ensures every member can read and understand how the business operates, their responsibilities, and company expectations.

How a Partnership Agreement Lawyer Can Help

Because whatever you leave out could cause a lot of problems, a partnership agreement should include everything ranging from the purpose of the business to each partner’s authority and responsibility.

Your lawyer can help you draft an agreement with the following information:

• Business details: Includes what your business does, the number of employees you expect, the date the business should begin operation, and the estimated revenue.
• Partner authority: Do all members have unlimited authority over business operations? Are there exceptions?
• Division of profit and loss: State clearly whether you share profits and losses according to the percentage of ownership or if you divide profits and losses equally amongst all partners regardless of ownership percentage. Also, clarify when partners can withdraw profits from the business.
• Length of the partnership: Do you plan on dissolving the partnership once you achieve a certain milestone? Even if you plan to operate for an unspecified duration, you must point that out in the agreement.
• Conflict resolution and decision making: How do you want to make decisions? Through a voting system? If so, what kind? If disputes arise, what measures are in place to solve it? The agreement should have instructions for how you solve each dispute.
• Handling of major changes: Clarify what happens in the event of a buyout, retirement or death of a partner. Also, how would you like to add a new partner?
• Dissolution: The partnership may not work out as planned, so specify how you would like to dissolve it.

How Much Do Partnership Agreement Contract Lawyers Charge?

Even though you can draft the partnership agreement yourself, your business and partners are better off involving an impartial and knowledgeable party in drafting the agreement. The attorney drafts a comprehensive, legally sound partnership agreement fair to all the involved parties.

The attorney fees for the partnership agreement depend on several factors:

• Agreement complexity
• Legal advocate experience
• Partnership location

Typically, good partnership agreement attorneys charge anywhere between $500 to more than $2000. Additionally, the attorney may be charged for preparing the shareholder agreement, drafting the corporate minutes or resolution, and preparing a multi-member operating agreement.

Work With an Experienced Local Lawyer

Are you venturing into a business partnership? A partnership agreement lawyer helps guide your business, steering it away from any potential conflicts. Lawyers from your area are on standby, waiting to help you through the partnership hassle-free.

Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!

About the Author

Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.

With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations. Contact Aaron at [email protected] for article suggestions, collaborations, or inquiries.