PARTNERSHIP AGREEMENT

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

Partnership Agreement Services

Many business owners who form partnership, genuinely believe in sharing business success at the beginning. Their starting point is 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 order words, if you are a 50% partner in a partnership, you are still liable for 100% business losses, borrowing, debt etc, if other partner fails to meet his or her share of 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 upon to enter into business together.
 
As Accountant and Business Advisor, we have seen many business partnerships run into difficulties in good and bad business conditions. Partnership Act was written in 1890 and it 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.