Sample Tennessee Partnership Agreement
How to Setup a Partnership Business and the Importance of the Partnership Agreement in Tennessee
Like most other states, you don’t have to prepare and sign a partnership agreement in the state of Tennessee for you to register your business as a partnership. However, the agreement is one of the most important documents in partnerships, and we recommend preparing one in the initial setup steps of the business. The document doesn’t have to be notarized to be legally binding, and all the parties of the partnerships need to do is to confirm that they are okay with the details in the agreement and then sign it. This agreement is a top-recommended business document that should be created between two or more people interested in forming a business partnership. Whether you are forming a general partnership or a limited partnership, this agreement would ensure that that business runs smoothly.
The partnership agreement in Tennessee, also called a partnership contract, a general partnership agreement, or a business agreement lays out the ground rules which are designed to ensure the smooth running of your business. While you could find legal counsel to ensure the preparation of the Tennessee partnership agreement, we recommend doing it by yourselves using our free Tennessee partnership agreement form. This legal agreement sample comes with all the important sections that you need to set strong foundations for your business.
Partnership Authority Statement
Note, however, that despite the fact that the state of Tennessee doesn’t call for the preparation of the partnership agreement, the state laws require the general partnership businesses to submit (albeit voluntarily) a document/ statement referred to as the Statement of Partnership Authority and then file this statement with the State Department. The filing of this statement must be done by a minimum of 2 business partners. Essentially, this statement would describe and name the partners with the power to take significant action on behalf of the other partners and the partnership. The statement is also intended to provide the other partners with confidence in the new business/ partnership.
So, how do you ensure that your business is set for success?
Before you look deep into statements and how you will be making profits or recovering losses, you need to specify the things that would ensure that success. What it means is that you need an enforceable partnership agreement. For an agreement that covers all the bases and ensures a strong backbone for the success of your business, here are some of the essential clauses that must be included in the agreement:
Financial Matters: Capital contribution & Distribution of profits/ losses
Money is one of the most contentious things in businesses, and if you are going into business with your best friends or family, you need to ensure that there are clear lines set with regards to money. For example, the initial (and additional) capital contribution of each partner must be specified in the agreement, whether the contribution is tangible or intangible. There should also be a valuation criterion for intangible contributions.
At the same time, the document must specify how the profits/ losses of the business will be divided, not to mention acceptable times and amounts when it comes to capital draws. The other financial matter regards liabilities and debts, and the partners allowed to enter legally binding contracts involving and affecting the financial state of the business. The latter also includes limitations to the contracts a partner could enter on behalf of the business, check clearing procedures, and the acceptable number of signatories. At the end of the day, these requirements and limitations ensure that the business is not put in a precarious place.
Dispute Resolution - how will conflicts be resolved? Is mediation a good option? Who will be involved in the mediation process? You need to ensure that disagreements and disputes between the partners are resolved easily and professionally to prevent the loss of time and money. It’s also worth noting that the agreement would take precedence to any court action.
Voting and management -here, the roles of the partners are specified, voting rights, events that necessitate voting, as well as the roles/ responsibilities of the managing partner.
Dissolution - the circumstances that would necessitate the dissolution of the partnership business and the procedures to be followed will be specified in this section. Matters like a buyout, partner termination, and adding a new partner would also be discussed in the agreement.
Once you have the agreement, the next step would be the preparation of the Statement of Partnership Authority. The important information about this statement is provided under the Revised Uniform Partnership Act (2001).
The other requirement you have to meet is to ensure that your form is filled out in English.
As you can see from the information provided above, the partnership agreement carries a lot of information regarding the partnership business.
To help you get started in Chattanooga, Nashville, Memphis, Knoxville, Gatlinburg, or any other city in Tennessee, download our free partnership agreement form here.
TN Partnership Agreement
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