What Should be Included in a Business Partnership Agreement

A business partnership agreement is a legally binding contract essential for any business partnership. It clearly defines the relationship between partners who join to own and operate a business. This agreement is crucial for outlining fundamental aspects of the partnership, and your protection against costly legal disputes and misunderstandings. 

A comprehensive agreement typically addresses key elements such as:

• Roles and responsibilities
• Capital contributions
• Profit and loss allocation
• Decision-making processes
• Procedures for partner departure

Consulting with an experienced law firm is necessary for those considering a business partnership agreement. At Southron Firm, our experienced business partnership attorneys have a deep understanding of Florida business law and extensive expertise in drafting, reviewing, and negotiating partnership agreements.

What Is a Business Partnership Agreement?

A business partnership agreement is a legally binding document that outlines the fundamental terms governing a business partnership. This agreement establishes the financial and operational framework for the partners’ collaboration, ensuring clarity and minimizing potential disruptions.

It’s crucial for partnership agreements to define key aspects such as each partner’s roles, responsibilities, capital contributions, and how profits and losses will be shared. By setting clear expectations and procedures from the outset, a well-drafted partnership agreement protects the interests of all involved and helps to prevent conflicts as the business evolves.

Our business partnership attorney will guide you through each step of the business partnership agreement process to protect your interests.

What Should Be Included in a Business Partnership Agreement?

At Southron Firm, our attorneys draft partnership agreements for Florida businesses and have seen firsthand how a strong partnership business agreement can prevent costly disputes later on. We ensure your agreement includes the following Florida-specific protections and legal terms:

1. The Name of Your Partnership 

Your agreement should clearly state the legal name of the partnership. This is the name under which the business will operate and must comply with Florida’s Fictitious Name Act (Fla. Stat. § 865.09) if it differs from the partners’ legal names.

2. Clearly Defined Partnership Roles and Authority (Florida Statute § 620.8301)

Each partner’s roles and legal authority should be clearly defined in the business partnership agreement. This includes outlining their day-to-day responsibilities, decision-making powers, and whether they can legally bind the partnership in contracts or financial obligations.

Under Florida Law, every partner is presumed to have equal rights in managing and conducting partnership business — unless otherwise stated in the agreement. That means without clarification, any partner could make binding decisions on behalf of the partnership.

To avoid confusion or disputes, your agreement should explicitly include:

• Each partner’s specific duties (e.g., managing finances, overseeing operations, handling legal matters)
• Their scope of authority to act on behalf of the partnership
• Any limitations or conditions on their decision-making power

Our business partnership agreement lawyer specializes in Business Partnership Agreements and is ready to help you negotiate fair terms and protect your business under Florida business law.

3. Capital Contributions and Percentage of Ownership

Each partner’s ownership interest in a Florida partnership is typically based on their capital contribution – whether in the form of money, property, or services.

To ensure legal clarity, Florida Statute § 620.8401 defaults to equal ownership and profit-sharing if no agreement exists. Without proper documentation, Florida courts often see disputes over ownership percentages — and in many cases, they defer to written agreements. Failing to formalize this can lead to litigation.

At Southron Firm, we ensure our clients’ agreements specifically document both what each partner contributes and what percentage of the business they own from the outset.

Your agreement should include:

• A breakdown of each partner’s capital contribution
• The type of contribution (e.g., cash, equipment, intellectual property, services)
• The ownership percentage assigned to each partner

4. Profit and Loss Distribution

Your business partnership agreement should clearly define the allocation of  profits and losses in partnership. This can follow each partner’s percentage of ownership, their capital contributions, or another agreed-upon formula — but it must be documented in writing to override Florida’s default rules.

Under Fla. Stat. § 620.8401(2), if no agreement exists, profits and losses are split equally, regardless of how much each partner contributed. This default rule can lead to unintended outcomes if one partner invested significantly more than the other.

Your agreement should answer:

• Will profits be divided based on ownership percentage (e.g., 60/40)?
• Are losses shared the same way as profits?
• Will draws or guaranteed payments be made before profit distribution?

At Southron Firm, we help business owners draft detailed, enforceable agreements that eliminate ambiguity and protect against disputes during profitable — and challenging — times.

5. Withdrawals, Salaries, and Compensation

Your business partnership agreement should clearly define how and when partners are compensated — whether through draws, guaranteed payments, or salaries. Without this clarity, misunderstandings over money can quickly lead to conflict.

Key considerations to include:

• Draws: Will partners be allowed to take periodic draws from anticipated profits? If so, how often and in what amount?
• Salaries or Guaranteed Payments: Will partners receive a fixed salary or guaranteed payment regardless of profit? This must be clearly spelled out and tied to services rendered.
• Expense Reimbursements: Outline whether and how partners will be reimbursed for out-of-pocket business expenses such as travel, marketing, or legal costs.

Schedule a Consultation with our experienced business lawyers to create a strong business partnership contract agreement.

6. Partnership Agreement Dispute Resolution Clause

Even the strongest partnerships can face disagreements. A well-drafted business partnership dispute resolution clause can help resolve conflicts efficiently while avoiding the expense and unpredictability of courtroom litigation.

Your agreement should specify:

• Preferred method of resolution (e.g., mediation, arbitration, or both)
• Location and rules governing the process
• Whether the outcome will be binding or non-binding

Under Florida Statutes § 44.104 (mediation) and § 682.02 (arbitration), courts will generally enforce these provisions if clearly stated and agreed to in advance.

7. Changes in Partnership Agreement and Business Partnership Exit Strategies (Buy-Sell Provisions)

A well-drafted buy-sell agreement protects your business when a partner dies, becomes disabled, divorces, retires, or exits voluntarily. Without this provision, ownership can transfer by default to a spouse, heirs, or even creditors — potentially derailing the business.

Your agreement should include:

• Triggers for buy-sell activation (death of business partner, divorce, disability, voluntary exit, bankruptcy)
• Valuation method for the partner’s interest (e.g., fair market value, formula-based)
• Funding mechanism, such as life insurance, installment payments, or retained earnings
• Timeline and process for executing the buyout

Under Florida Statute § 620.8601, a partner’s dissociation doesn’t automatically trigger dissolution. But, without a clear buy-sell clause, disputes over valuation and ownership transition can arise.

8. Dissolving a Business Partnership- Dissolution Terms

Every Florida business partnership agreement should clearly define how to dissolve a partnership—whether by mutual agreement, expiration, court order, or the occurrence of a triggering event like a partner’s death or bankruptcy.

Your agreement should outline:

• Events that trigger dissolution: (e.g., unanimous vote, death of a partner, illegality)
• Winding-up procedures: Including final accounting, creditor payments, and notice to clients/vendors
• Asset distribution plan: Prioritizing liabilities and partner contributions before profit division
• Filing of the Statement of Dissolution: Filing with the Florida Division of Corporations
• Under Florida law (Fla. Stat. § 620.8801 et seq.): Failure to address dissolution terms can lead to confusion, extended liabilities, or costly legal disputes.

Additional Reading: How to Dissolve a Partnership in Florida

Avoid costly disputes—let us draft your legal business partnership agreement now.

How to Structure a Business Partnership

Choosing the right business structure is critical—it affects liability, taxation, and decision-making authority. Your partnership agreement must align with the structure you select. Below are the most common types:

• General Partnership (GP): Easy to form and often the default if no formal agreement is in place. All partners equally share profits, losses, and unlimited personal liability.
• Limited Partnership (LP): Includes at least one general partner who manages the business and assumes full liability, while limited partners contribute capital and have limited liability but no managerial role.
• Limited Liability Partnership (LLP): Common among professionals (e.g., lawyers, doctors), this structure protects all partners from personal liability in certain business debts or lawsuits. Regulations vary by state.
• Limited Liability Limited Partnership (LLLP): A newer, more complex option offering limited liability to both general and limited partners. Not all states recognize this structure.

Structuring a 50 50 Partnership Agreement

In a 50 50 partnership contract, both partners share equal ownership, profits, responsibilities, and decision-making power. However, clear documentation is essential to avoid deadlocks and misunderstandings. A well-drafted partnership agreement should include:

• Defined roles and responsibilities
• Procedures for resolving disagreements
• Capital contributions and profit distributions
• Exit strategies and buyout terms
• Non-compete and confidentiality clauses

Even in an equal partnership, legal guidance is crucial to ensure fairness, prevent conflict, and protect both parties’ interests from the start.

Get your business partnership agreement draft reviewed by experienced attorneys today.

Can a Partnership Agreement Be Modified or Changed?

Yes — a partnership agreement can be modified, but any changes must follow a clear legal process to be enforceable. Florida law typically requires written consent from all partners for amendments to be valid.

To modify a partnership agreement:

• Discuss and Agree: All partners must agree to the proposed changes.
• Draft a Written Amendment: Clearly identify which sections are being changed and state the new terms.
• Legal Review: Have our Florida business attorney review the amendment to ensure it’s legally sound.
• Sign and Date: All partners must sign the amendment.
• Maintain Records: Keep the signed amendment with the original agreement.

At Southron Firm, we help business partners ensure that modifications are properly documented to avoid future disputes. Whether you’re changing profit shares, adding a partner, or updating responsibilities, a written amendment is essential.

Work with our trusted business partnership agreement law firm to protect your business.

Business Partnerships Advantages and Disadvantages

Understanding the business partnerships advantages and disadvantages is crucial for anyone considering this business structure.

Advantages:

• Shared resources (capital, expertise, and workload)
• Ease of formation and lower setup costs
• Diverse skills and perspectives
• Pass-through taxation
• Increased borrowing capacity

Disadvantages:

• Unlimited liability (for general partners)
• Potential for disagreements
• Shared profits
• Difficulty in transferring ownership
• Authority issues

A well-drafted business partnership agreement, created with the help of our business partnership attorney, can help mitigate some of these disadvantages by clearly outlining roles, responsibilities, decision-making processes, and exit strategies.

Secure experienced legal counsel to guide your business partnership with confidence and get expert legal advice.

Does a Business Need a Lawyer for a Partnership Agreement?

Yes, a business needs a lawyer for a partnership agreement, having the right legal guidance is invaluable when it comes to a business partnership agreement. At Southron Firm, we bring extensive experience in structuring fair and legally sound agreements, helping business owners ensure a successful partnership.

We have guided numerous clients through the intricate steps of partnership agreements, ensuring their contracts meet legal standards while protecting their interests. If you’re considering a partnership agreement or have questions about how to approach the process, we can offer assistance with state laws. 

Our business partnership attorneys ensure:

• Legal Compliance
• Protection of Interests
• Clarity and Precision
• Anticipate Future Interests
• Negotiation Support
• Customization

Let us help you safeguard your business with a clear, well-structured business partnership agreement. Contact us today at 813-773-5105 to schedule a consultation with our skilled counsel.

FAQ

1. How do I write a business partnership agreement?

Start by defining your partnership business structure, authority of partners in a partnership, and how business decisions will be made. Our law firm can draft a customized agreement that protects your personal assets and clearly outlines the business relationship.

2. How do I create a business partnership agreement?

To create one, you’ll need to address the type of business, roles of individual partners, and what happens if a partner decides to leave. We help you navigate the legal details so your operating agreement is both compliant and tailored to your needs.

3. How do I set up a business partnership agreement?

Setting up an agreement requires outlining the pros and cons of the partnership, ownership terms, and succession planning for the remaining partner. Our attorneys ensure the agreement supports your goals and safeguards your interests as you start a business.