Business Services: Partnership

By statute, a partnership is an association of two or more persons to carry on a business for profit as co-owners, whether or not the persons intend to create a partnership. Certain specific situations may be excluded from the definition of partnership – you can find out what options are available for your situation by consulting with an experienced attorney.

If you are in a partnership and do not have a written partnership agreement, the state will provide one for you. If you want to decide these matters, you need a written partnership agreement. The partnership agreement should specify the terms of the partnership, the relationship between the partners, the responsibilities of the partners and the partners’ interests upon leaving or winding up the partnership.

You should consider what you want to happen if the partners cannot agree on a particular course of action – how would a decision be reached? How will profits and losses be divided? What can a partner do on behalf of the partnership? What limits are there on obligating the partnership? Can you protect yourself from personal liability for the actions of another partner? What if one of the partners dies, retires or leaves the partnership for financial reasons? Would the remaining partners buy the retiring partner’s interest? What would be the terms of any buy-out?

,p>In addition to preparing a partnership agreement, a good attorney will explain the provisions to the partners, discuss available options and potential problems with the partners and offer general advice about protecting yourselves and avoiding problems in the future.