Partnership Agreement Template — General Partnership Contract
Define partner roles, contributions, profit splits, and exit terms. $9.99 PDF.
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No signup required$9.99 PDFInstant downloadA general partnership is the simplest multi-owner business structure — two or more people carrying on a business together for profit, without filing formal entity paperwork with the state. Unlike an LLC, a general partnership does not create a liability shield: each partner is personally liable for the debts and obligations of the business and can bind the partnership through their own acts. That makes the written partnership agreement the single most important document the partners will sign. Without one, your state's default partnership statute fills the gaps — usually splitting profits equally regardless of contribution, giving every partner equal management rights, and dissolving the partnership the moment any partner leaves. This template lets you override those defaults: custom profit splits, defined roles, capital accounts, voting rules, buyout terms, and dissolution procedures.
Why use this template
- Define each partner's role, day-to-day responsibilities, and decision-making authority so there is no ambiguity about who runs what
- Document initial capital contributions — cash, property, equipment, or services — and establish capital accounts that track each partner's economic stake
- Set custom profit and loss sharing percentages instead of being stuck with your state's default equal-split rule, even when contributions are unequal
- Buyout provisions handle departure, death, or disability — including valuation method, payment terms, and a right of first refusal that prevents outsiders from buying in
- Dissolution and wind-up clauses control how the partnership ends, how assets are distributed, and how remaining liabilities are settled between partners
Common use cases
- →Two or more small business partners launching a shop, restaurant, agency, or service business together without forming an LLC
- →Real estate investment partnership where partners pool capital to buy, hold, or flip properties and need clear profit-split and exit terms
- →Professional practice — law firm, medical practice, accounting firm, or design studio — operating as a general partnership rather than a PLLC
- →Family business arrangement between siblings, spouses, or parent-and-child where everyone wants formal documentation of contributions and shares
- →Side business or joint venture between two existing companies or individuals collaborating on a single product, project, or revenue stream
- →Creative or content partnership — co-founders of a podcast, YouTube channel, newsletter, or band — splitting revenue and rights between collaborators
Frequently Asked Questions
What's the difference between a partnership agreement and an LLC operating agreement?▼
A partnership agreement governs a general partnership — an unincorporated business owned by two or more partners with no liability shield. An LLC operating agreement governs a limited liability company, a registered entity that protects owners from personal liability for business debts. Functionally the documents cover similar ground (contributions, profit splits, management, buyouts, dissolution), but a partnership agreement does not and cannot create limited liability — each partner remains personally liable for partnership debts and the acts of other partners. Use a partnership agreement when you have already chosen the general-partnership form, usually for simplicity, low cost, or because the partners explicitly want pass-through taxation without state filings. If liability protection matters, form an LLC and use an operating agreement instead.
Is a partnership agreement legally required to form a general partnership?▼
No — under every state's partnership statute, a general partnership is created automatically the moment two or more people associate to carry on a business for profit, whether or not they sign anything. That is also exactly why a written partnership agreement is critical: without one, your state's default rules apply, and those defaults almost certainly do not match what the partners actually intended. Default rules typically split profits equally regardless of contribution, give every partner equal management authority, and dissolve the partnership automatically when any partner dies, withdraws, or goes bankrupt. A written agreement overrides the defaults.
How are profits and losses split in a general partnership?▼
However the partnership agreement says they are split. If the agreement is silent or there is no agreement, the default under the Uniform Partnership Act (adopted in most states) is that profits and losses are split equally among partners, regardless of how much each partner contributed in capital or labor. That default frequently surprises partners — the person who put up 90% of the money is shocked to learn they share profits 50/50 with a partner who contributed only sweat equity. Our template lets you set custom percentages tied to contributions, roles, or any other formula the partners agree on.
What happens if one partner wants to leave the partnership?▼
Under default state law, the withdrawal of any partner causes immediate dissolution of the partnership, forcing the remaining partners to wind up the business and distribute assets. That outcome is almost never what the partners want. A well-drafted partnership agreement includes a buyout clause that allows the remaining partners to continue the business while purchasing the departing partner's interest at a defined valuation — book value, an appraised fair market value, or a multiple of revenue or earnings. The agreement also sets payment terms, often paying the buyout over 3 to 5 years to avoid a cash crunch.
Are partners personally liable for partnership debts?▼
Yes. In a general partnership, every partner is jointly and severally liable for all partnership debts and obligations. That means a creditor can pursue any one partner for the entire debt, not just that partner's pro-rata share. Worse, each partner can bind the partnership through their own acts within the apparent scope of the business — so one partner's mistakes or misconduct can create liability for all the others. This personal-liability exposure is the single biggest reason most multi-owner small businesses today form an LLC instead of a general partnership. Use this template only when you have weighed that tradeoff and chosen the partnership form deliberately.
How is a general partnership taxed?▼
A general partnership is a pass-through entity for federal income tax purposes. The partnership itself files an informational return on IRS Form 1065 but does not pay federal income tax. Instead, each partner receives a Schedule K-1 reporting their share of the partnership's income, losses, deductions, and credits, and reports those amounts on their personal Form 1040. Partners pay self-employment tax on their distributive share of business income. Distributions of cash do not themselves trigger tax — partners are taxed on their share of partnership income whether or not the cash is actually distributed. Always consult a CPA on tax treatment for your specific facts.
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