What to Know About a Partnership Agreement in Arkansas
A Partnership Agreement is also known as:
Business Partnership Agreement
General Partnership Agreement
Articles of Partnership
Whether you’re entering into a business partnership with friends, family colleagues or none of those, it is highly recommended to prepare a Business Partnership Agreement and having all of the partners sign it. Because verbal agreements and handshakes are not enforceable, it’s essential to have a written document so that all partners understand the contractual obligations.
A Business Partnership Agreement is legal contract between two or more organizations or individuals who have agreed to go into business together, and to share in the profits/losses of the business. The Partnership Contract establishes the guidelines that will govern and guide your partnership forward and help to ensure the success and survival of your venture.
Ready in Minutes Using Our Free Partnership Agreement Template
You do not need an attorney to create a Business Partnership Agreement. You can use our free Partnership Agreement Arkansas template. Simply input your information above and in minutes, you can edit, download, print and email your legal document. The Agreement does not require a notary or witnesses, only the signatures of the partners to be enforceable.
Benefits of a Partnership Agreement in Arkansas
The Contract gives the partners a firm understanding of their roles, responsibilities, and relationships (among and between partners and the partnership).
It stipulates the course of action to be taken to prevent escalation of minor problems, as well as the management of major issues that would otherwise call for involvement of the courts.
This Agreement is essential as it overrides any default state laws, especially the ones on profit-sharing.
Some of the Elements of a Partnership Contract are detailed below.
Name and Purpose of Partnership
Your Partnership Agreement will include the name of the partnership, the reason for its formation and where you will be doing business. This section may also include the term/duration of the partnership, if there is one. For example, the partnership may end once a project has been completed, or after a set amount of time. It may also be open ended with no set date or criteria to end it.
Partner Contributions and Allocations
The Partnership Agreement will specify how much each partner is putting into the partnership, in terms of cash, capital, and time/activity contributions. A partner’s share of profits/losses is often allocated based on individual capital contributions, or you may decide that all partners share equally in profits/losses of the business. All of this will be outlined in the Agreement.
The Contract will also include a section on capital draws by the partners. For example, how are capital draws determined? Are partners permitted to take regular capital draws from their profits from the partnership? What about withdrawing their allocated profits in entirety?
Partner Authority and Voting
This section of the Agreement assigns and limits the authority of a partner to make binding decisions on behalf of the partnership and/or the other partners, to ensure that no one partner enters into agreements without the knowledge and approval of the other partners.
You may decide to require that certain decisions in the course of business require voting by the partners, which decisions require a unanimous vote, and which decisions will pass with a majority or a minority vote. The Contract should also stipulate the voting rights allocated to each partner and the method used to determine the voting rights allocated to each partner.
Management Partner and Tax Matters Partner
It is standard to name a Managing Partner to be responsible for the day-to-day running of the business. The Managing Partner can be a named partner, or you can decide to designate an independent manager. The Contract will also designate a Tax Matters Partner to represent the partnership to the IRS and report any tax issues to the partners.
Will you allow new partners into the business in the future? If so, what is the process for bringing in new partners?
Death and Withdrawal of Partners
What steps are to be taken if a partner wishes to withdraw from the partnership or upon the death of a partner? Will the partnership outlive its partners? Which Buyout Agreements will be included to protect the remaining partners and the partnership?
One of the most important inclusions of a Partnership Agreement is to spell out in advance the steps to be taken to resolve conflicts and disputes among the partners, so that you can remedy deadlocks and save time, energy and money. A standard dispute resolution strategy is the inclusion of a Mediation Clause to compel the partners to work with a third-party professional mediator or an arbitrator to resolve certain conflicts to eliminate the need to go through the court system.
Our website will help you create an Arkansas Partnership Agreement. We offer free on-line samples and templates of legal forms, including Partnership Agreements that make the process that much faster.
If you are entering into a partnership in Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, North Little Rock, Conway, Rogers, Bentonville, Pine Bluff or any other city in Arkansas, you can easily create your own Partnership Agreement above and get down to business!