The Partnership Agreement is a voluntary contract between two or more to enter the business relationship between or between each other with the intention of carrying out the business and sharing the benefits / loss among themselves as agreed upon in the agreement. The parties in the agreement are referred to as partners. Partners agree to put all of their capital, labor and skills to achieve maximum profit from business. The partnership agreement will also spell the way in which it can be dissolved and must be signed and followed by each partner.
Partnership agreements are defined as arrangements agreed upon by all parties in the transaction and are an effective method to help each partner for:
* Agree to share the vision to collaborate together
* Organize the objectives that can be accepted together
* Determine the basis to start working together
* Ensure that each partner is clear and agree to what needs to be achieved
* Assess the effectiveness of the agreement
* Bringing problems related to accountability and responsibility
* Place a strong foundation that can sail through difficulties and testing in front
The partnership agreement must begin small and slowly develop. It must grow from year to year with annual reviews along the way to continue to fix it. There is no hard and fast way to write written documents but face-to-face discussion among partners, determine the specific problem and set this in writing before actually composing it into the agreement is some of the initial steps valuable after. Partnership agreement documents, and any changes, must be formally approved and signed by all partners and dates.
The agreement must begin with the business name and business nature. The principle of business places must go to the address of the place of business. Date when the settings are made between partners and the operating period must be explicitly set in the agreement. The amount of capital to be invested by partners in this business will be held in a separate capital account and none of the couples can withdraw money from it. And, finally each individual capital account will be maintained in accordance with the ability to share profits from partners as stipulated in the partnership agreement.
Account profit and loss agreements must be made individually in the names of each partner and the benefits / losses will be distributed in accordance with the provisions agreed upon by each individual. Advantages or losses of partnerships will be charged to individual income accounts of partners. Partners are not entitled to draw any salary, but can take advantage of their income for every money needed as defined in the partnership agreement.