Partnership Agreement

[phatlip12]

I'm currently working on a web application (a new one) and want to form a partnership agreement. I was wondering if anybody here could give me some advice/assistance or possibly point me to some helpful recourses? The person I am entering the agreement with lives in another state, so I'm thinking about mailing him two copies to sign (both the same), getting them both notarized and then sending him one of the copies to him.

[comhcinc]

the only advice i am willing to give is get a lawyer involved

[mushroom]

This site gives you the basics of what a partnership agreement is
http://tinyurl.com/2vybzt

This site has a partnership agreement form generator but i don't know if it will hold up in court
http://www.lawdepot.com/contracts/genpartner/

Principal Components of Articles of Partnership:
There are many parts that should be included in any articles of partnership. These are:

* Names of included parties - includes all names of people participating in this contract
* Commencement of partnership- includes when the partnership should begin. The date of the contract is assumed as this date, if none is given.
* Duration of partnership - includes how long the partnership should last. It is automatically assumed that the death of one of the contracting parties breaks the contract, unless otherwise stated.
* Business to be done - includes exactly what will be done in this partnership. This section should be very particular to avoid confusion and loopholes.
* Name of firm - includes the name of the business entity.
* Initial investments - includes how much each partner will invest immediately or by installments.
* Division of profits and losses - includes what percentages of profits and losses each partner will receive. If it is not a limited partnership, then there is unlimited liability (each partner is responsible for all partners' debts, including their own).
* Ending of the business - includes what happens when the business winds down. Usually this includes three parts: 1) All assets are turned into cash and divided among the members in a certain proportion; 2) one partner may purchase the others' shares at their value; 3) all property is divided among the members in their proper proportions.
* Date of writing - includes simply the date that the contract was written.

Common Components of Articles of Partnership:
There are also multiple sections which are often included as well in articles of partnership, based on the circumstance. These are:

* Leadership - includes the granting of one partner the rights to manage and administer the business or a specific department.
* Majority management - includes the authorization of a majority of partners to manage the affairs of the entire partnership. This is particularly common where there are numerous partners.
* Annual account - includes provisions to account for, annually, the property and debts of the business.
* Consistent interest - includes the forbidding of any partner to carry out business unrelated to the partnership. This is usually implied in articles of partnership.
* Misconduct expulsion - includes the allowance of expelling partners who commit gross misconduct or becomes insolvent, bankrupt, etc. This is particularly common where there are numerous partners.
* Resolution of dispute - includes the submission of arguments to arbitration.

[phatlip12]

the only advice i am willing to give is get a lawyer involved

Thats what I was afraid to hear. This may sound like a stupid question, but how much do you think something like this may cost? I would imagine pretty pricey (but if it has to be done...then it has to be done). Any idea if he would have to be present?

[ariastar]

No no no, let me think clearly in the morning. No need to pay lawyers. I've been through all of this. Have you considered the benefits to incorporating as a Nevada c-corp versus a partnership? Or are you grabbing at partnership because if the word "partner"? There's more to it than a simple agreement. And you can expect to pay anywhere form a thousand to five thousand to do it right. Tack on another $5-$10k if you want to use an attorney.

A while back I asked for info and you didn't send it. Was interested in helping.

But I guess I can help now by dispensing my knowledge. E-mail me. Not PM.

[acidburn]

www.bizfilings.com
Check out this site as a resource. We have used them before so I know they are legitimate. You can pay them to do the legal paperwork and filings for setting up a business.

Mort importantly for you at this stage there are also articles to read up on the different types of businesses you can set up. c-corp, llc, s-corp, etc. A good site to do research.

Also look for a series of books called "How to start a business in ________."
Fill in the blank with whatever state you want. I think there is a book for most states. Not completely comprehensive, but a good legal resource and starting point.

[masherscf]

Thats what I was afraid to hear. This may sound like a stupid question, but how much do you think something like this may cost? I would imagine pretty pricey (but if it has to be done...then it has to be done). Any idea if he would have to be present?

Starting a business takes money. In order to protect yourself you need to get a lawyer. There are some thing that you're just unqualified to do. Creating a business and a partnership in such a way they you're protected from unforeseeable events is one of those things.

[acidburn]

Also try the Small Business Administration to see if there are any local resources you can consult for legal advice. www.sba.gov

[comhcinc]

Thats what I was afraid to hear. This may sound like a stupid question, but how much do you think something like this may cost? I would imagine pretty pricey (but if it has to be done...then it has to be done). Any idea if he would have to be present?

the lawyer would represent you at this point and should cost too much, but it is something you really need to do. if this isn't done right and you have some problems you could lose you ass

[phatlip12]

No no no, let me think clearly in the morning. No need to pay lawyers. I've been through all of this. Have you considered the benefits to incorporating as a Nevada c-corp versus a partnership? Or are you grabbing at partnership because if the word "partner"? There's more to it than a simple agreement. And you can expect to pay anywhere form a thousand to five thousand to do it right. Tack on another $5-$10k if you want to use an attorney.

A while back I asked for info and you didn't send it. Was interested in helping.

But I guess I can help now by dispensing my knowledge. E-mail me. Not PM.

I'm not even sure what a Nevada c-corp is. What is it exactly and why is it better then a partnership agreement?

I did send you a PM about it (4/20/07 was the date) but you never got back at me. Check your message box to see if its there. I can send you the details via email as well, what is your address?

[phatlip12]

I came up with an idea on how we could handle this today. We could both create a "temporary" agreement ourselves. We could make this agreement valid for a year and have a clause in the agreement saying we have to make revisions/a more formal agreement (that we both agree upon) a year later. This will give us time for the project to grow/hopefully make a little bit of money. We can set aside a certain amount of money each month and put it towards a lawyer. Then, when we are due for our renewal...we will have the money to hire a lawyer and make sure everything is on the up and up. I think its important for a lawyer to eventually look it over/help us create a formal agreement as it is the best way to protect our project from getting taken away from us. I would hate to be tricked into some sort of deal by an investor and have the company practically taken from us due to our lack of knowledge in the area. We would also go to a lawyer before any major financial changes (VC or investment money for example).

[ariastar]

I came up with an idea on how we could handle this today. We could both create a "temporary" agreement ourselves. We could make this agreement valid for a year and have a clause in the agreement saying we have to make revisions/a more formal agreement (that we both agree upon) a year later. This will give us time for the project to grow/hopefully make a little bit of money. We can set aside a certain amount of money each month and put it towards a lawyer. Then, when we are due for our renewal...we will have the money to hire a lawyer and make sure everything is on the up and up. I think its important for a lawyer to eventually look it over/help us create a formal agreement as it is the best way to protect our project from getting taken away from us. I would hate to be tricked into some sort of deal by an investor and have the company practically taken from us due to our lack of knowledge in the area. We would also go to a lawyer before any major financial changes (VC or investment money for example).

Oh my god, sorry, but you're clueless. There are too many loopholes in that. WHat happens if one doesn't put as much money into the account each month? What happens if one wants to withdraw before a year? What happens if, at the end of a year, it falls apart and there's no attorney? Who is responsible for expenses along the way?

What do you know about the different types of company formations?

[phatlip12]

Oh my god, sorry, but you're clueless. There are too many loopholes in that. WHat happens if one doesn't put as much money into the account each month? What happens if one wants to withdraw before a year? What happens if, at the end of a year, it falls apart and there's no attorney? Who is responsible for expenses along the way?

What do you know about the different types of company formations?

I know it's not a perfect option, but I don't have many because we don't have thousands of dollars for a lawyer. I'm only 18 (19 in a few days).

As far as other types of company formations, I really don't know.

[acidburn]

I'm not even sure what a Nevada c-corp is. What is it exactly and why is it better then a partnership agreement?


Depending on the type of Partnership that is formed, some types are dissolved automatically with the death of one partner. S-corps and C-Corps are more durable and are not legally dissolved with the death of a partner.

I won't go into specifics because I don't want to steer you in the wrong directions since I don't know all the legal details.

As for Nevada, there are many tax benefits to incorporating there. Also, Nevada's corporate shield laws are also stronger than most other states. Harder to pierce the corporate veil in the event of a lawsuit, etc. That's why you'll see a lot of major corporations incorporating there, such as Citicorp to name one.


With this partnership, what is your ultimate goal? Are you trying to create a work agreement between yourself and this partner only? Or are you wanting to form a legal business with this guy?



Check out this link to free training materials from the SBA:
http://sba.gov/services/training/onlinecourses/index.html

if you don't have a business plan on paper, that should be high on your list of things to do.