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Partnership agreement

Starting a business together — settle the hard questions while they are easy.

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Two people open a shop, put in unequal money, and agree to split it fairly. The partnership works perfectly until the first year it does not — and by then the questions that were easy at the start have become impossible.

The questions to answer now

What each partner put in. Capital in figures, per partner, with the profit share each one carries. Unequal capital with an unstated split is where most partnership disputes begin.

How much each can take out. A monthly drawings limit. The earliest and most predictable argument in a small firm, and one line prevents it.

Who can sign for the firm. A threshold above which two signatures are needed protects everyone, including the partner who would otherwise be trusted with it.

What each partner is expected to do. Full time, part time, capital only. Written down before it becomes a grievance.

How someone leaves. Notice, a first right for the remaining partners to buy the share, and a method for valuing it. Without a valuation method agreed in advance, a partner leaving is a negotiation from nothing.

Registration and accounts

A partnership firm is registered with the concerned office, and the agreement is what the registration is built on — so get it right before you file.

Keep the firm's money in the firm's account. Mixing personal and business money is the practice that makes every later disagreement unresolvable, because nobody can prove anything.

Close and agree the accounts at the end of each period. A partnership that never closes its books discovers all its problems at once.

Common questions

Is a partnership deed the same as this?

Yes — deed and agreement are the same document under different names. It sets out what each partner contributes, what each receives, and how the firm is run.

Do we need this to register the firm?

Registration generally requires the agreement between the partners, so it is the first document to prepare rather than the last. Check the exact list with the office you are registering at.

Can we have three partners?

Yes. The third partner section is optional — fill it in and it appears in the document, leave it blank and it does not.

Is my information sent anywhere?

No. Everything stays in your browser. Nothing is uploaded, and there is no account unless you make one to sync your work across devices.

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