Free 50/50 Partnership Agreement Template

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.

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Last Update April 14th, 2024

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Table of Contents:

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

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:

Profits
Responsibilities
Decision-making power

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.

Pros	Cons
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.

PDF WORD

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
Contract-making authority
Authority to take out a loan
Responsibilities of each partner
Conflict resolution
Decision-making process

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.

You are only a few steps away from your own 50/50 Partnership Agreement!

Download our professional examples

PDF WORD

Preview of your 50/50 Partnership Agreement

PARTNERSHIP AGREEMENT

State of _________

County of _________

This Partnership Agreement (the "Agreement") is made this _________ day of _________, _________ (the "Effective Date"). The Partnership in this Agreement is made by and between the following parties (the "Partners"):

Partner Name: _________
Address: _________
E-mail: _________

Partner Name: _________
Address: _________
E-Mail: _________

The Partners agree to form a Partnership as set forth in this Agreement under the following terms and conditions:

A. NAME

The Partners in this Partnership shall operate under the name of _________ (the "Partnership").

B. PARTNERSHIP CHANGE OF NAME

In addition to the foregoing name, the activities and business of the Partnership may be conducted under such other name or names as may be designated from time to time by the Partnership. The foregoing name of the Partnership may also be amended upon the written and unanimous vote of all Partners.

Subject to certain circumstances which are described in detail below, if a Partner withdraws or dies and his or her interests in the Partnership are successfully bought out, the Partnership may change its name subject to the written and unanimous vote of all Partners.

C. PURPOSE OF THE PARTNERSHIP

The Partners voluntarily associate themselves and have come together to become legal partners for the following purpose or business: _________.

D. DURATION, TERMINATION, PLACE OF BUSINESS, AND OTHER RELATED MATTERS

• If the Agreement is executed, the Partnership shall commence on the _________ day of _________, _________, and continue until dissolved by mutual agreement or until terminated as provided in this Agreement.

• The principal place of business of the Partnership will be _________, _________, _________, _________ and/or such other place as may be mutually agreed on by the Partners.

• If applicable, the Partners will obtain any necessary licenses and permits to do business, register its Doing Business As Name ("DBA"), and obtain a Federal Employer Identification Number ("EIN").

E. INITIAL CAPITAL CONTRIBUTIONS

Initial capital contribution to the Partnership shall consist of:

• _________: $_________
• _________: $_________

A Joint Capital Account (a "Capital Account") shall be established for all contributions submitted by the Partners. Unless all Partners consent in writing to a withdrawal, all capital contributions shall be considered final and submitted by _________.

F. OWNERSHIP INTEREST

The ownership interests that the Partners shall have in the Partnership will be as follows:

• _________: _________%
• _________: _________%

G. MANAGEMENT AND AUTHORITY

Unless otherwise stated herein, the following criteria shall govern over all Partners:

• Each Partner shall have an equal voice and an equal vote in the management of the Partnership.

• Partners shall not have the individual authority to bind the Partnership in making contracts and incurring obligations in the name and on the credit of the Partnership.

• All decisions affecting the Partnership shall be valid, provided that every one of those decisions is based on a majority of equal votes.

The Partners agree to opt out of appointing or naming a Partnership Representative under 26 U.S. Code § 6221.

H. COSTS

Each Partner shall have a cost sharing percentage in accordance to the following:

• _________: _________%
• _________: _________%

I. PROFITS

From and after the commencement date of this Agreement, all net profits of the Partnership shall be shared by the Partners in accordance to the following percentages:

• _________: _________%
• _________: _________%

Once the costs of the Partnership have been paid in accordance to the cost sharing percentages designated herein, _________ shall account and distribute the net profits on the _________ of the month, according to the net profit percentages indicated above.

J. SALARIES AND DRAWINGS

No Partner shall receive any salary for services rendered to the Partnership, unless said Partners agree by unanimous consent to a permanent salary. In that case, the Partners shall have drawings in such amounts as may be agreed upon by the Partners.

K. ACCOUNTINGS

• A complete accounting of all Partnership accounts and affairs shall be audited and rendered to each Partner as of the close of business on the last day of each sixth month.

• All Partners shall maintain a joint contribution account. All Partners shall maintain a joint distribution account.

At all times during the continuance of the Partnership, all Partners shall keep accurate and complete books of account in which all matters relating to the Partnership, including all income, expenditures, assets, and liabilities, shall be entered. The books shall be kept open to examination to all Partners, regardless of whether they are majority or minority Partners, upon their request.

• Each Partner shall be individually responsible for his or her own share of income taxes on any distributions made.

• The Books of Account shall be kept on a cash basis.

• The fiscal year of the Partnership shall end on the last day of _________ of each year. For each fiscal year, all Partners will present their position on the state of the Partnership within _________ day(s) of the completion of this one-year period.

• The following Partners shall have authority to sign or draw checks from any Joint Capital Account:
- _________
- _________

L. NEW PARTNERS

New partners may be added to the Partnership in one of two ways:

• A new partner may enter the Partnership by invitation from the existing Partners.

• A new partner may also enter the Partnership by purchase of a deceased, retiring, withdrawing, or disabled partner's interests.

The Partnership shall amend this Agreement to include new partners upon the written and unanimous vote of all Partners.

M. WITHDRAWAL OF A PARTNER

Any Partner may withdraw from the Partnership giving each of the remaining partners at least _________ days' prior written notice of his or her intentions to withdraw. The withdrawal will become effective on the termination of the _________-day notice.

When a Partner withdraws, his or her interest shall be determined by evaluating the worth of the Partnership, and the withdrawing partner shall be paid the following:

1. A cash payment for the value of his or her unrepaid capital contributions, plus _________% interest on such contributions.

2. A cash payment in _________ equal installments, every _________ months, commencing _________ days after the close of the current fiscal year for his or her interest in the current year's profits.

3. An annual cash payment _________ days after the close of each fiscal year for the Partner's share of receipts from the business obtained prior to his or her withdrawal but completed after withdrawal.

4. Any annual fiscal losses of the Partnership or draws by the withdrawing partner prior to the withdrawal will be deducted from these sums.

The Partnership shall have the right to buy out the remaining property interests in the Partnership within _________ days. If no individual Partner(s) finalize a purchase agreement by _________ days after the withdrawing partner gives them notice of said withdrawal, the Partnership will be dissolved.

To prevent dissolution of the Partnership, the Partners may allow a new member to buy the withdrawing partner's interests in the Partnership.

N. DEATH OF A PARTNER

Upon the death of one of the Partners, the Partnership shall have _________ days to choose if they want to buy out the deceased partner's interest and distribute it equally between them.

The deceased partner's interests in the Partnership will be established based on his or her date of death, representing:

1. The total of the decedent's capital contribution to the Partnership.
2. His or her share of the net profits or losses for the current fiscal year to the date of death.
3. His or her share of the current business at the date of death.
4. Deducting therefrom any draw that the decedent had taken during the current fiscal year and any indebtedness of the decedent to the Partnership.

If the Partnership does not choose to use its option to buy out the deceased partner's interest in the Partnership, the Partners may cast a majority vote to allow the deceased partner's estate to continue to share in the partnership's profits and losses, just as the deceased person would have if he or she were alive. In such case, however, the estate shall not, as a transferee, participate in any management role of the Partnership nor have a right to vote.

If the remaining Partners do not use their option to buy out the remaining interest of the Partnership and distribute them equally, or if a majority of the Partners do not vote to allow the deceased partner's estate to become a transferee, interested individual partners will have the right to buy the interest equally.

If there is not a single individual partner interested in buying out the remaining interest, the Partnership shall be dissolved.

To prevent dissolution of the Partnership, the Partners may allow a new member to buy the deceased partner's interests.

O. VALUATION OF REMAINING PARTNERSHIP INTEREST

If a Partner withdraws or dies, as referenced above, the Partners shall unanimously agree to hire an external accounting firm to assess the value of the remaining share of interests. If the appraisal figures rendered by the external accounting firm do not satisfy the Partners, a second accounting firm may assess the value of the remaining share of interest in the Partnership. If the Partners do not agree to the appraisals or are not acceptable to them, the matter shall be subjected to an alternative dispute resolution as herein provided.

P. DISSOLUTION

The Partnership may be dissolved and liquidated, and all debts shall be paid upon the majority vote of all the partners. Any remaining funds shall be distributed on a percentage of ownership interest established under this Agreement.

Q. AMENDMENTS AND NOTICES

• This Agreement may be amended only with the unanimous consent of all the Partners and by, or in, writing signed by all the Partners.

• All notices between the Partners provided for or permitted under this Agreement or by law, shall be in writing and shall be deemed duly served when personally delivered to a partner, or, in lieu of such personal service, when deposited in the United States mail, certified, postage prepaid, addressed to the Partner at the address of the principal place of business of the Partnership or to such other place as may from time to time be specified in a notice given pursuant to this paragraph as the address for service of notice on the partner.

IN WITNESS WHEREOF, this Agreement has been executed and delivered in the manner prescribed by law as of the Effective Date first written above.

By: ________________________________ Date: _______________
_________

By: ________________________________ Date: _______________
_________

Free 50/50 Partnership Agreement Template

What Is a 50/50 Partnership Agreement

How Does It Work

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

What Are the Key Terms to Include in 50/50 Partnership Agreements?

How Do I Get a 50/50 Partnership Agreement?

What Are Common Disputes in 50/50 Partnerships?

Preview of your 50/50 Partnership Agreement