Partnership Agreement Template
Download This Resource
Get the fillable document, the editable version, and an action checklist:
The short version (2026):
- A partnership agreement is for an ongoing business you run together. It overrides your state’s one-size-fits-all default rules on profit splits, control, and what happens when a partner leaves. (For a single project with an end date, you want a joint venture agreement instead.)
- A general partnership does not limit your liability. Every general partner is personally on the hook for the firm’s debts, jointly and severally, and the agreement does not change that. Only a different structure, such as an LLC or LLP, gives you a liability shield.
- Two “rules” most templates still get wrong. A partner’s death does not automatically dissolve the partnership under modern law (the others buy out the estate and continue), and a limited partner no longer loses protection merely for helping manage in states that adopted the 2001 limited-partnership act. Confirm your state.
- Taxes pass through. The partnership files Form 1065 and gives each partner a Schedule K-1; the partners pay the tax on their own returns. The partnership itself pays no income tax.
Free Partnership Agreement Template (Word & PDF)
Going into business with a partner on a handshake means your state’s default rules quietly write your agreement for you, and they rarely match what either of you intended. A partnership agreement fixes that. It defines who contributes what, how profits and losses are split, how decisions get made, and what happens when a partner leaves, dies, or wants out. Download the full template above, or copy the version further down this page and fill it in.
Below the template you will find a clause-by-clause guide, the general-versus-limited decision, how a partnership is taxed, and the point most free templates skip: The agreement governs the partners among themselves, but it does not put a wall between you and the firm’s creditors.
What is included in this free download:
- General partnership agreement (copy-paste version below, plus the full download)
- Limited partnership (LP/GP) provisions
- Capital contribution schedule with valuation methods
- Profit and loss allocation options
- Management and voting matrix
- Buy-sell provisions (death, disability, withdrawal, expulsion)
- Dissolution and wind-down procedures
- Non-compete and confidentiality clauses
Want it tailored to your partners, state, and structure? LawDepot’s guided builder walks you through a partnership agreement step by step.
What Is a Partnership Agreement?
A partnership agreement (sometimes called articles of partnership) is a binding contract that sets the terms between two or more people or businesses who agree to run a business together for profit. The agreement matters most for what it overrides. Without one, your state’s version of the Uniform Partnership Act (UPA) or the Revised Uniform Partnership Act (RUPA) fills in every blank, and those defaults are blunt.
Default rules you probably do not want:
- Profits split equally, even when contributions were not
- Every partner has equal management authority, including a silent investor
- Any partner can bind the whole partnership to a contract
- No non-compete after a partner leaves, so they can open a competing shop the next day
A written agreement overrides nearly all of these. One older default you will still see repeated, that a partner’s death automatically dissolves the partnership, is no longer the rule in most states. We cover that below, because getting it wrong leads people to draft around a problem that no longer exists while missing the one that does.
General Partnership vs. Limited Partnership
General Partnership (GP)
Every partner shares management and unlimited personal liability. Any partner can bind the partnership, every partner is personally liable for the firm’s debts, profits and losses pass through to personal returns (Form 1065 to Schedule K-1), and no state filing is needed to form one. It is the simplest and cheapest structure, and it offers no liability protection. Best for professional firms and small businesses where all partners actively participate.
Limited Partnership (LP)
An LP has two classes of partner.
General partners manage the business, can bind it, and carry unlimited personal liability.
Limited partners are passive investors whose liability is capped at what they invested.
Here is the part most templates get wrong. Under the older Revised Uniform Limited Partnership Act, a limited partner who took part in running the business could lose that liability shield. That was called the “control rule.” The newer Uniform Limited Partnership Act of 2001, which many states have now adopted, eliminated the control rule: A limited partner is no longer personally liable “even if the limited partner participates in the management and control of the limited partnership” (see the Cornell Legal Information Institute overview). Which version applies depends on your state, so confirm your state’s limited-partnership act before a limited partner rolls up their sleeves. Best for real estate and investment ventures where some members fund the business but do not run it.
| Feature | General Partnership | Limited Partnership |
|---|---|---|
| Formation | No filing required | Must file with the state |
| Liability | Unlimited for all partners | Unlimited for GPs; limited for LPs |
| Management | All partners | General partners run it |
| Tax treatment | Pass-through (Form 1065) | Pass-through (Form 1065) |
| Cost to form | $0–$100 | $200–$1,000+ |
| Dissolution | A partner’s exit can trigger a buyout | Survives a limited partner’s exit |
The Liability Reality: A Partnership Agreement Is Not a Liability Shield
This is the point to be clear-eyed about before you sign anything. A partnership agreement is a powerful tool for setting the rules between the partners. It does nothing to limit what the firm’s outside creditors can collect from you personally.
A quick definition. Joint and several liability means each partner can be held responsible for the full amount of a partnership debt, not only their slice of it. The Revised Uniform Partnership Act puts it plainly: “All partners are liable jointly and severally for all obligations of the partnership” (RUPA §306, summarized at the Cornell Legal Information Institute). A creditor generally has to exhaust the partnership’s own assets first, but after that your house and savings are on the table, and a creditor can pursue the partner who is easiest to collect from, not the one who caused the problem.
No clause fixes this. If liability protection is what you are after, the answer is a different structure: An LLC, a limited liability partnership (LLP), or a limited partnership where you are a limited partner. A general partnership agreement is the right document when the partners accept that exposure or carry insurance against it. Do this, not that: Choose the structure for the liability you want, then use the agreement to run it well.
Copy-and-Paste General Partnership Agreement
Here is a plain-English general partnership agreement you can copy, paste, and fill in. Replace every bracketed field. For a limited partnership, three or more partners, or significant capital, have a business attorney review it before signing.
GENERAL PARTNERSHIP AGREEMENT
This General Partnership Agreement (“Agreement”) is made on [DATE] by and between [PARTNER A FULL NAME], [PARTNER B FULL NAME], and [PARTNER C FULL NAME] (each a “Partner” and together the “Partners”).
1. Formation and Name. The Partners form a general partnership (the “Partnership”) under the laws of the State of [STATE], operating as [PARTNERSHIP NAME], with its principal office at [ADDRESS].
2. Purpose. The Partnership’s business is [DESCRIBE THE BUSINESS], and any lawful activity related to it.
3. Term. The Partnership begins on [START DATE] and continues until dissolved under this Agreement.
4. Capital Contributions. Each Partner contributes: Partner A [cash $____ / property / services, described and valued]; Partner B [____]; Partner C [____]. Ownership percentages are A [__]%, B [__]%, C [__]%. Additional capital may be required only by [unanimous / majority] vote.
5. Profits, Losses, and Distributions. Net profits and losses are allocated [in proportion to ownership / as follows: ____]. Distributions are made [monthly / quarterly / annually]. The Partnership will distribute enough each year for the Partners to cover the tax on their allocated share.
6. Management and Voting. Unless stated otherwise, each Partner has equal management rights and one vote, and ordinary decisions pass by [majority]. The following require [unanimous] consent: borrowing over $[AMOUNT], selling major assets, admitting a new Partner, guaranteeing debt, or amending this Agreement. No Partner may bind the Partnership above $[AMOUNT] without approval.
7. Duties and Restrictions. Each Partner owes the Partnership a duty of loyalty (no self-dealing or taking its opportunities) and a duty of care, will devote [full-time / agreed] effort, and will not compete with the Partnership during the Partnership.
8. Banking, Books, and Taxes. The Partnership keeps a bank account in its own name and does not mix funds with any Partner’s own money. Complete books are kept and open to every Partner. The Partnership files IRS Form 1065 and issues each Partner a Schedule K-1.
9. Admission of New Partners. A new Partner may be admitted only with [unanimous] consent and must sign this Agreement or an amendment. A new Partner is not personally liable for debts the Partnership owed before admission.
10. Withdrawal, Death, and Dissociation. A Partner may withdraw on [60 / 90] days’ written notice. A Partner’s withdrawal, death, or long-term incapacity causes that Partner’s dissociation. The Partnership then continues and buys out the dissociated Partner’s interest under Section 11, rather than automatically dissolving.
11. Buy-Sell and Valuation. A departing or deceased Partner’s interest is valued by [book value / independent appraisal / an agreed formula] and paid [as a lump sum within 60 days / in [24 / 36] monthly installments with [__]% interest]. Where life insurance funds a buyout, the proceeds are applied to the price.
12. Dissolution and Winding Up. The Partnership dissolves only on [unanimous agreement / an event listed here / court order]. On dissolution, money is applied in this order: outside creditors, then Partner loans, then return of capital, then any remainder by ownership percentage. A final Form 1065 is filed.
13. Dispute Resolution and Governing Law. The Partners will negotiate in good faith, then mediate, then resolve any remaining dispute by binding arbitration in [CITY, STATE]. This Agreement is governed by the laws of the State of [STATE].
14. Entire Agreement. This Agreement is the entire agreement between the Partners on its subject and may be changed only in a writing signed by all Partners.
Partner A: ______________________ Date: __________
Partner B: ______________________ Date: __________
Partner C: ______________________ Date: __________
This is a starting point, not a finished deal. The numbers and the choices in brackets, especially how you value a non-cash contribution and how a buyout is paid, are where the real negotiation happens.
Clause-by-Clause: What Each Section Does
Partners and ownership (Sections 1, 4)
Name the partnership, the state whose law governs, and each partner with their type and ownership percentage. Then write down contributions and what each is worth. This single table prevents the most common partnership fight: someone who put in $200,000 cash sitting next to someone who put in “expertise,” with no agreement on what that expertise was worth.
| Partner | Cash | Property | Services | Total Value | Ownership % |
|---|---|---|---|---|---|
| Partner A | $[AMT] | [DESC] | [DESC] | $[TOTAL] | [__]% |
| Partner B | $[AMT] | [DESC] | [DESC] | $[TOTAL] | [__]% |
Profits and losses (Section 5)
You do not have to split profits by ownership. Three common approaches: Proportional to ownership; a salary to working partners plus a split of the remainder; or tiered (one split on the first dollars of profit, another above a threshold). Whatever you choose, add a tax distribution so partners are not taxed on income they never received in cash.
Management and voting (Section 6)
Decide what any partner can do alone, what needs a majority, and what needs everyone. Flag the consequence: With 50/50 partners and no tiebreaker, a single disagreement can freeze the business. A deadlock provision (a mediator, or a buy-sell “shotgun” clause) is cheap insurance.
Exit, death, and buyout (Sections 10–12)
This is the half of the agreement people skip and later regret. Under RUPA, a partner’s death or withdrawal causes dissociation (that partner leaving), not the end of the business; the partnership continues and buys out their interest. Spell out the valuation method and how the buyout is paid, and consider funding it with life insurance so the surviving partners are not forced to sell. If a buyout is paid over time, a promissory note documents the installments.
How to Fill Out Your Partnership Agreement
Step 1: Agree on the structure first
Before touching the template, decide: General partnership or limited partnership, who is a general versus a limited partner, and the business’s purpose and scope.
Step 2: Value every contribution honestly
Cash is easy. Services, relationships, and intellectual property are not. Get written agreement on what each non-cash contribution is worth, and get a professional appraisal for contributed property. Verbal valuations fall apart the first time profits are distributed.
Step 3: Define roles clearly
Give each partner a clear lane: One handles finances, another operations, another sales. Overlapping responsibility for the same function is how partners end up pointing fingers.
Step 4: Set decision rules before you disagree
Write the voting thresholds while everyone is still friendly: What one partner can do alone, what needs a majority, what needs unanimity, and what happens at a deadlock.
Step 5: Plan for the end at the beginning
Every partnership ends, through a sale, a departure, or a wind-down. Cover all three with specific procedures, timelines, and dollar terms.
Step 6: Execute properly
All partners sign the same document, each keeps an original, and you review it annually. If you formed a limited partnership, file the Certificate of Limited Partnership with your state. A general partnership of two or more members also needs its own EIN to open a bank account and file taxes.
Partnership Agreement vs. LLC Operating Agreement
Many businesses that would once have been partnerships now form LLCs, for one main reason: The liability shield. The trade-offs:
| Factor | General Partnership | LLC |
|---|---|---|
| Personal liability | Unlimited | Limited to your investment |
| Formation | Informal (can be by conduct) | State filing required |
| Tax treatment | Pass-through | Pass-through by default |
| Management | Equal by default | Highly customizable |
| Creditor protection | None | Charging-order protection |
A “charging order” means a creditor of one owner can reach that owner’s distributions but cannot seize the business itself, a protection a general partnership does not offer. A partnership still makes sense for some professional firms (a few states limit professional LLCs), for simple ventures, and for family limited partnerships used in estate planning. If you are weighing the two, our LLC operating agreement guide covers the LLC side in detail.
Free Template vs. an Attorney-Drafted Agreement
A template is a smart starting point, but it is not automatically equal to an agreement a business attorney drafts around your exact situation. Use the template when the partnership is straightforward; bring in a lawyer when the structure or the stakes climb.
This template works well for:
- Two-partner general partnerships
- Service businesses with clear roles
- Partnerships under roughly $250,000 in initial capital
- Simple profit-split arrangements
- Businesses where all partners actively participate
Hire a business attorney (roughly $1,500 to $5,000) for:
- Limited partnerships (the GP/LP structure)
- Partnerships with three or more partners
- Significant capital ($250,000+)
- Interests that include valuable intellectual property
- Complex buy-sell or special tax allocations
Between fully DIY and a $3,000 attorney bill? LawDepot’s guided builder tailors a partnership agreement to your structure, partners, and state.
How Is a Partnership Taxed?
A partnership is a pass-through entity. It does not pay federal income tax itself. Instead it files an information return, IRS Form 1065, and gives each partner a Schedule K-1 showing their share of profit or loss. Each partner reports that share on their own return and pays the tax, whether or not the cash was actually distributed, which is why a tax distribution clause matters.
A few practical points: General partners usually owe self-employment tax on their share of the business income; the partnership needs its own EIN; and state rules vary, with some states charging a partnership-level fee or filing. The IRS lays out the framework in Publication 541 (Partnerships). For anything beyond a simple split, confirm the details with a tax professional.
Common Partnership Mistakes
Mistake 1: No written agreement
A handshake means your state’s default rules govern, and each partner will remember the verbal deal differently when money is tight. Put it in writing.
Mistake 2: Equal split despite unequal contributions
A 50/50 split feels fair until one partner put in $200,000 and the other put in “hard work.” Ownership should reflect the real value each partner brings, agreed honestly upfront.
Mistake 3: No exit strategy
Partners who plan how to start but not how to end create legal headaches. Cover voluntary withdrawal, expulsion, death, disability, and full dissolution.
Mistake 4: Ignoring deadlock
Two partners with equal votes and no tiebreaker can paralyze the business. Add a mediation or arbitration clause, or a buy-sell “shotgun” provision.
Mistake 5: No non-compete or confidentiality
Without them, a departing partner can open an identical business across the street, take your clients, and recruit your staff, all perfectly legally. If partners will handle sensitive information, pair the agreement with a standalone non-disclosure agreement.
Frequently Asked Questions
Do I need a partnership agreement to start a business with someone?
Legally, no. A partnership can form by a verbal agreement or even by conduct. But without a written agreement, your state’s default rules govern, and they rarely match what you intended. For any serious business relationship, a written agreement is essential.
Does a partnership agreement limit my personal liability?
No. In a general partnership, every partner is personally liable for the firm’s debts, jointly and severally, and the agreement does not change that. If you want a liability shield, you need a different structure, such as an LLC, an LLP, or status as a limited partner. The agreement controls the relationship between partners, not what outside creditors can collect.
Is a partnership agreement the same as a joint venture agreement?
No. A partnership is an ongoing business with broad scope. A joint venture is a temporary arrangement for one specific project with a defined end. A JV limits authority and tends to limit exposure to that project, while a partnership creates broader, continuing mutual obligations.
What happens if my partner dies?
Under the modern Revised Uniform Partnership Act, a partner’s death causes that partner’s dissociation, not the automatic dissolution of the business. The partnership continues and buys out the deceased partner’s interest, with the price set by your agreement’s valuation method. Without a buyout provision, the partner’s estate can inherit the interest, which is why a funded buy-sell clause matters.
Can a limited partner help run the business?
It depends on your state. Under the older limited-partnership act, a limited partner who took part in control could lose their liability protection. The 2001 act, adopted by many states, removed that “control rule,” so a limited partner keeps the shield even while participating in management. Confirm which version your state follows before relying on it.
How much does a partnership agreement cost?
A DIY template is $0 to $50, an online builder runs roughly $100 to $500, and an attorney-drafted agreement is about $1,500 to $5,000 for a simple general partnership, more for a limited partnership. The price scales with the number of partners, the capital involved, and the special provisions you need.
Can an LLC be a partner in a partnership?
Yes. An LLC can be a partner, which is common in real estate, where an LLC serves as the general partner so the individuals behind it get liability protection. Identify each partner in the agreement by its exact legal entity name.
Download Your Free Partnership Agreement Template
Protect the business relationship with clear terms for contributions, profits, management, and exit from day one, and make a clear-eyed choice about the structure that fits the liability you are willing to carry.
Available formats: Microsoft Word (.docx, fully editable), PDF (printable with fillable fields), and the copy-paste version above.
Prefer a guided, fill-in-the-blank document tailored to your state? LawDepot builds your partnership agreement step by step.
Sources & References
This guide is fact-checked against the following official and authoritative sources:
- Cornell LII — Partnership (RUPA §306/§601/§701)
- Cornell LII — Limited Partnership (ULPA 2001)
- IRS — Publication 541, Partnerships
- IRS — Instructions for Form 1065
Fact-checked: July 2026 · ClearLegalTips editorial team. This is legal information, not legal advice.
ClearLegalTips is an independent publisher of plain-English legal guides, free document templates, and cost calculators for common U.S. legal tasks. Every article is reviewed by founder and editor Fatih Öztürk and fact-checked against official sources: statutes, court fee schedules, and government filing pages. Not a law firm; nothing here is legal advice.
