Partnership Agreement Services

Advising business partners in creating tailored made “Partnership Agreement” suitable to their conditions and business structure

Many business owners who form partnerships genuinely believe in sharing business success from the beginning. Their starting point is an emotional partnership, friendship, relationship, and mutual respect; therefore, they feel they do not need a written “Partnership Agreement.”

It is true that all partners are “equally, collectively, and individually” responsible for business debt and liabilities. In other words, if you are a 50% partner in a partnership, you are still liable for 100% of the business losses, borrowings, debt, etc., if the other partner fails to meet his or her share of the liability.

It is also true that you do not need a written “Partnership Agreement” by law, but it is wise to put the conditions of the partnership in writing, setting out all conditions under which you have agreed to enter into business together.

As Accountants and Business Advisors, we have seen many business partnerships run into difficulties in both good and bad business conditions. The Partnership Act, written in 1890, states that each partner is entitled to share the profits of the business equally, regardless of the amount contributed. A partnership is automatically terminated on the death of a partner.

There are many common issues in a business partnership:

Decision making process involves more than 1 person delays the process

Each partner brings different skills, knowledge and competence and each partner has a strength in specific area of business

Disagreement often remain unresolved

Each partner feels that other partner is contributing less in time, efforts and commitments

Lack of clarity about role of each partner leads to expectation that ‘others will do what I have not done’

No written Partnership Agreement detailing the role, responsibilities, condition, obligation etc.

At Sterling Finance, we advise the business partners in creating tailored made “Partnership Agreement” suitable to their conditions and business structure.