While a written partnership agreement is not legally required in order to establish a partnership, a well-drafted partnership agreement will allow you and your partners to decide in advance how you would like to handle certain situations when they arise.
Some items that should be covered in your written partnership agreement are:
1. Each partner’s contribution to the partnership (i.e. time, money or skill);
2. The allocation of profits, losses, and draws;
3. Each partners’ authority and management duties;
4. How to admit new partners;
5. What happens if there is a bankruptcy, withdrawal, or death of a partner, and
6. How to resolve disputes such as by arbitration, mediation or in a courtroom.
By having a written partnership agreement, you help to avoid misunderstandings which may occur during the course of your business relationship. And remember, your partnership agreement does not have to be set in stone, it can always be amended and revised at a later date should events change.