Unlike a verbal agreement, a written partnership agreement isn't subject to memory loss. It can be a lifesaver when you and your business partners encounter difficult decisions, such as what to do when one partner leaves. The cost of your partnership agreement depends on how detailed you want it to be. It can be as inexpensive as a sheet of paper or as expensive as attorney fees.
When You Need an Agreement
You can legally form a partnership with only a verbal agreement between you and your business partners. The only time you have to file paperwork registering your partnership with the state is to start a limited partnership. In some states, the secretary of state allows you to start even a limited partnership with a verbal agreement. Despite the law, it's wise to have a written agreement even if you form a general partnership. Without one, you and your business partners are likely to have conflicts that are difficult to resolve to everyone's liking.
It helps to involve an impartial, yet knowledgeable, outside party in drafting your partnership agreement. An attorney can provide a detailed, legally sound agreement that is fair to all partners. Entrepreneur magazine reports that as of 2011, attorneys charge as much as $2,000 to draft a partnership agreement. If this price is too steep for your budget, you can make your own for free.
Do It Yourself
Your partnership agreement should contain certain key features -- namely, how you will split money, how you will make decisions and what you will do if a partner leaves or dies. You might add additional information, such as how often you will have business meetings. While your own agreement may be less formal than one drafted by an attorney, what matters is that you and your partners all understand it. Provide each partner with a copy of the agreement signed by everyone.
Abiding by the Agreement
An agreement is only as good as its enforcement, so refer to yours when making business decisions. Disregarding the agreement even once can make it invalid in future situations. If you and your partners modify the agreement, destroy the old version for the sake of clarity. Further prevent misunderstandings by dating each version of the agreement.