What to Know About a Partnership Agreement in Georgia
A Partnership Agreement is also known as:
Business Partnership Agreement
General Partnership Agreement
Articles of Partnership
When entering into a business partnership, it is highly recommended to prepare a Business Partnership Agreement and having all of the partners sign it. A Business Partnership Agreement is a legally binding contract between two or more parties (organizations or individuals) who’ve agreed to enter into business together and to share in the profits/losses of the business. The Partnership Contract sets forth the rules that will govern your partnership and guide the partnership forward to ensure its success and survival.
Ready in Minutes Using Our Free Partnership Agreement Template
You can easily create your Partnership Agreement in Georgia using our free template. You do not need a lawyer. Simply input your information above and in minutes, you can download, edit, email and print your legal document. A Partnership Agreement does not require a notary or witnesses, only the signatures of the partners to be legally binding.
Benefits of a Partnership Agreement in Georgia
Even and especially when the partnership is between you and your family or close friends, this contract gives the partners a firm understanding of their roles, responsibilities, and relationship (among members and between members and the partnership).
It stipulates the course of action you should take to prevent escalation of minor problems, as well as the management of major issues that would otherwise call for the 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 in Georgia will include the name of your partnership and the reason for its formation. This section may also include the term/duration of the partnership, if there is one.
Partner Contributions and Allocation of Profits and Losses
How much is each partner putting into the partnership, in terms of cash, capital, and time contributions?
Profits and Losses
How do you allocate your profits and losses? Is the allocation based on individual capital share contributions, or do all partners get an equal profit/loss share?
How are capital draws decided, and do partners get to take out regular capital draws from their allocated profits from the partnership? Are partners allowed to withdraw their allocated profits in entirety?
Partner Authority and Voting
This section of the Partnership Contract ensures that no one partner makes a binding decision on behalf of the partnership or the other partners, without the knowledge and the approval of the other partners.
In addition to governing what a partner may or may not do, the Partnership Agreement will also stipulate the conditions and authority on business decision making. Here, the limitations of a partner are outlined.
The Partnership Contract may require that the partners vote on certain decisions. Some of the decisions will require a unanimous vote, while other 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
The Managing Partner is responsible for the day-to-day running of the partnership business operations. Therefore, the Partnership Contract is also expected to name the Managing Partner for the partnership, and whether the Managing Partner is a named partner or 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.
Is the partnership open to new partners in the future? If yes, what’s the process of bringing in the new partners?
Death and Withdrawal of Partners
What steps are to be taken upon the death or the withdrawal of a partner? Should the partnership outlive its partners? Which Buyout Agreements are put in place to protect the partnership?
By spelling out the steps to resolve conflicts and disputes among the partners in advance, you can remedy deadlocks and save time, energy and money. One of the best dispute resolution strategies 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.
If you are entering into a partnership in Atlanta, Macon, Savannah, Augusta, Athens, Alpharetta, or any other city in Georgia, you can use our free Partnership Agreement template and get down to business!