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Consider these tips when writing business partnership agreements

| Feb 24, 2023 | Business Formation And Planning, Partnership Agreements And Disputes |

Many Texas companies choose partnerships for business formations. While partnerships offer many unique advantages, you must write your agreements correctly.

Identify the business

Partnership agreements must provide basic generalities about your business. Examples may include the following:

  • Name of the business
  • Business location
  • Legal structure

When determining legal structure, you should specify what type of partnership you will have. Specifically, you may choose one of the following types of partnerships:

  • Limited
  • Limited liability
  • General


While some partnerships divide ownership equally, others split the ownership in a way that gives a larger percentage ownership to one partner. Your business agreement should specify each partner’s ownership stake (percentage) as well as the responsibilities that each owes towards the company.


To prevent long-term disagreements, each partnership agreement should specify exactly who makes the decisions in the company. Include each of these factors:

  • The role of each partner in making decisions
  • The partner who has financial control
  • Which partners must approve new partners
  • Distributions of losses, debts and profits


No matter how friendly partners may seem when forming the business, disputes over the company will occur. Each partnership agreement should include a dispute resolution process. Standard methods include turning to mediation or arbitration to settle differences.

Major developments

Every business goes through changes, and a well-written agreement will designate a plan for handling most of them. Major life changes you should consider addressing in your partnership agreement include:

  • Death of a partner
  • Buyout or a partner
  • Retirement of a partner
  • Dissolution of the partnership

Forming a partnership could dramatically change your professional and financial future. Correctly writing your partnership agreement allows these changes to remain positive.