Share all profits and business responsibilities equally with another individual. Structure all terms and conditions with your partner by using our printable 50/50 Partnership Agreement template.
Last Update February 15th, 2023
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- What Is a 50/50 Partnership Agreement
- Why Use a 50/50 Partnership Agreement
- How to Write a 50/50 Partnership Agreement
- Pros and Cons of a 50/50 Partnership Agreement
- 50/50 Partnership Agreement Sample
- Other Business Documents
- FAQs About 50/50 Partnership Agreements
Download our professional examples
What Is a 50/50 Partnership Agreement
A 50/50 Partnership Agreement is a legal contract between two individuals who decide to go into business together.
This agreement outlines the terms and conditions of the partnership, including the division of:
It should specifically state each partner’s responsibilities in the business and who makes certain choices when circumstances arise such as the need to hire or fire an employee or making a sale.
Costs and any damages that may occur would also be shared equally between the two partners.
Create your own agreement in minutes with our 50/50 Partnership Agreement template.
How Does It Work
Unlike other Partnership Agreements, a 50/50 Agreement will almost always be limited to only two parties.
When created correctly, it clearly outlines what each partner is responsible for, and that they share the expenses and profits of the business.
Although the name includes 50/50, it’s not necessary to make every aspect of the partnership exactly equal.
How your responsibilities are shared can be decided by you and the other party involved.
Why Use a 50/50 Partnership Agreement
If you’re interested in starting a business, and would like to work with someone else, then it’s essential to know when to use a 50/50 Partnership Agreement.
It’s a good idea to use this type of agreement whether you know your partner well or not. If your future business partner is someone you know really well, it may be easier to agree on terms.
Using a 50/50 Partnership Agreement is even more critical when you don’t know your future partner that well.
In either case, creating the document is a huge advantage for business partners because it helps avoid future misunderstandings.
With a Partnership Agreement, you can:
Make sure that each partner has access to the business
Create a conflict resolution plan
Set expectations for income
Receive a minority share
When you create a 50/50 Partnership Agreement and include these details you’ll save yourself from future disputes with your partner.
How to Write a 50/50 Partnership Agreement
Creating clear and concise terms for your Partnership Agreement will help you and your partner successfully share the responsibilities and profits of your business.
To properly draft your document simply follow the steps below.
Include the details of each partner: Write details including each partner's name and contact information.
Add the partnership information: Provide the business's name, the address it is located at, and the start date of your partnership.
Provide investment details: Include how much each partner will invest, which is normally done 50/50.
Establish accounts: Determine that each partner will have separate capital and income accounts.
Settle profits and losses: Mention how profits and losses are shared based on percentages of net profits and losses.
Include partner’s salaries and drawings: Mention if you or your partner will have a salary, and how you can withdraw profits from another account.
Mention where books are kept: Include where the partnership’s records will be stored.
Reference how the partnership can end: Include how the partnership may end, by dissolution, withdrawal, etc., and what procedures to take.
It’s also important to ensure the business or company you choose is not already trademarked in your state.
It’s crucial to get these steps correct and include all necessary information, which is why it’s recommended to create an agreement with an ordinary or even Small Business 50/50 Partnership Agreement template.
Pros and Cons of a 50/50 Partnership Agreement
While a 50/50 Partnership Agreement may seem like a safe bet, it’s not always the best legal form to use in every situation.
To help you understand what the benefits and negatives of this agreement are you can refer to the following table.
|You share the risk, responsibility, and costs with someone else||You must share the profit|
|Each partner brings their expertise to the partnership||There may be disputes over money and decisions|
|You have someone to support you and set up goals||Communication will always be necessary|
|More flexibility when starting a business with a partner||There may be an unclear chain of command|
While negative situations may arise when operating a business with a partner, they can be avoided if you plan ahead, always communicate, and have all terms clearly defined.
50/50 Partnership Agreement Sample
One of the best ways to fully understand how to structure your Partnership Agreement is to look over a completed example.
Review the following example to help you create a well-written agreement.
Other Business Documents
When creating a business there are other legal contracts and forms that you will need to use.
You can use these business-related documents when you are running a business, alone or with a partner.
FAQs About 50/50 Partnership Agreements
When you plan to work with a partner, some questions may arise regarding how to use a 50/50 Partnership Agreement or how to get one.
Review the responses to the following FAQs to get answers to some commonly asked questions.
What Are the Key Terms to Include in 50/50 Partnership Agreements?
In a 50/50 partnership agreement, the terms of the arrangement need to be crystal clear.
The key terms that should be mentioned, include:
Name of the partnership
Costs of each partner
Authority to take out a loan
Responsibilities of each partner
By including all the necessary terms you protect yourself from various types of conflicts.
How Do I Get a 50/50 Partnership Agreement?
There are lawyers who specialize in business law and can create your agreement for you. However, you will likely be charged a significant amount for their services.
It may also be time-consuming, depending on how long it takes to find the correct lawyer and how busy they are.
Draft your own document using a 50/50 Partnership Agreement template as a much cheaper alternative that you can download and print in your own home.
What Are Common Disputes in 50/50 Partnerships?
When you form an equal partnership with someone else, disputes may arise over who receives a certain amount of money and the responsibilities of each partner.
The most common disputes that arise involve:
Each partner’s share of the profits
Failure to compromise or agree on a decision
Broken agreements and promises
By making a clear 50/50 Partnership Agreement you can make it less likely that these problems occur between you and your partner.