What is a partnership agreement?
When two people go into business together without forming a company, the law in many places treats them as a general partnership. Without a written agreement, default rules decide how profits are split and what happens when a partner leaves — and they may not match what you intended. A partnership agreement puts your own answers in writing while you still agree on them.
This template sets up a general partnership between two partners. It records each partner's capital contribution and profit share, how often profits are paid out, who can decide what (with a spending limit above which both must agree, and a list of decisions that always need both), a route to mediation if you deadlock, each partner's duties and a no-competition promise, bank accounts and records, and a full exit plan: withdrawal on notice, with the remaining partner choosing to buy out the leaver's interest (their capital account plus undistributed profits less losses, unless you agree another price, with an independent accountant settling disputed accounts) or to dissolve, the same for death, incapacity or bankruptcy, and the order money is paid out on dissolution. It is plain about personal liability. Both partners sign and initial every page.
- Best for
- Two people starting or formalising a small business together
- Signed by
- Both partners
- Profit split
- Any percentage you choose, e.g. 50/50 or 60/40
- Structure
- General partnership — partners may be personally liable for its debts
- Length
- 3 pages, initialled on every page
When to Use a partnership agreement
- Two friends or colleagues starting a design studio, shop or consultancy
- Business partners who have been trading together informally and want it in writing
- Two professionals sharing premises, clients and profits
- A husband-and-wife or family business with two owners
- Partners contributing unequal money or equipment who want the split recorded
What You Fill In
18 blanks, then the name and email of each person who signs: first partner, second partner.
1 The partnership
- Start date*
- Partnership name*
- Business purpose*
- Principal place of business
2 First partner
- First partner's full name*
- First partner's address
- First partner's capital contribution*
- First partner's share of profits and losses (%)*
3 Second partner
- Second partner's full name*
- Second partner's address
- Second partner's capital contribution*
- Second partner's share of profits and losses (%)*
4 Money and decisions
- Currency*
- A partner may spend alone up to*
- Profits are distributed* monthly · quarterly · twice a year · once a year
- Partnership bank
5 Other terms
- Notice to withdraw (days)*
- Governing law*
6 Who signs
- First partner signature and date, initials on every page
- Second partner signature and date, initials on every page
What the partnership agreement Covers
- Formation and name
- Purpose
- Capital contributions
- Profits and losses
- Management and decisions
- Duties of the Partners
- Bank accounts and records
- Withdrawal of a Partner
- Dissolution
- Liability
- General
Using the partnership agreement, step by step
1 Name the partnership and its purpose
Enter the trading name, start date and a short description of the business. The purpose limits what the partnership does unless you both agree otherwise in writing, so describe it broadly enough to cover your plans.
2 Record the capital and profit shares
Describe what each partner puts in — cash, equipment, a vehicle — with values. Then enter each partner's share of profits and losses; the two percentages should add up to 100. Shares do not have to match contributions.
3 Set the money rules
Choose the currency, the most either partner may commit alone, how often profits are paid out, and optionally the bank. Anything above the spending limit, and decisions such as borrowing, hiring or taking on a new partner, need both partners' written agreement.
4 Agree the exit terms and sign
Set how many days' notice a partner must give to withdraw and the governing law. The buy-out price formula, the 12 months to pay it, and the order money is paid out on dissolution are fixed in the template, so read them together before you sign. Send it to your partner; VergeHR places both signature and initials boxes and files the signed agreement in Files.
Tips Before You Send It
- Talk through the hard cases before you sign — what if one of you wants out, stops working, or wants to bring in a third partner.
- In a general partnership each partner can usually be personally liable for the business's debts. If you want to limit that, ask an adviser about a limited company, LLC or limited liability partnership.
- Some places require a partnership or its trading name to be registered, and partnerships usually have their own tax filings. Check what applies where you trade.
- Keep the business's money in its own bank account from day one, and keep proper records — the buy-out and dissolution terms depend on them.
- This template is for two partners. For more partners or unusual profit arrangements, have a lawyer draft a bespoke agreement.
Sign It Online In Minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. VergeHR builds the PDF with every signature, date and initials box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in Files and emailed to everyone.
Partnership agreement: frequently asked questions
Do we need a written partnership agreement?
In many places a partnership can exist without one, but then default rules in the law decide things like profit shares and what happens when a partner leaves. A written agreement lets you decide those points yourselves and gives you something to refer to if you disagree.
What happens if one partner wants to leave?
They give the notice you set. The remaining partner then chooses either to buy their interest — at their capital account plus undistributed profits, less their share of losses, payable within 12 months — and carry on, or to dissolve the partnership. If you can't agree the accounts, an independent accountant decides.
Are partners personally liable?
In a general partnership, each partner may be personally liable to third parties for the partnership's debts. Between the partners, this agreement shares debts and losses in the profit percentages, and a partner who causes a loss by acting outside their authority or through fraud or wilful misconduct must cover it.
Is a partnership agreement signed electronically valid?
In the US (ESIGN Act and UETA), the UK, the EU (eIDAS) and Canada, electronic signatures are generally valid for ordinary business contracts like a partnership agreement. Registrations with a government office may have their own filing rules. VergeHR keeps an audit trail and a Certificate of Completion with the signed PDF.
Can I change the wording?
You fill in the partners, contributions, shares, limits, notice and governing law. If you need different clauses, draft your own agreement and upload it to VergeHR eSignature; you can still place the signature boxes in the editor.
Is this template free?
Yes. The template is free to use with the eSignature app in VergeHR. Your partner doesn't need a VergeHR login to sign.