A partnership is one of the most natural ways for people to go into business together — and one of the most legally vulnerable when it is not properly documented. In Florida, if two or more people operate a business together for profit without forming a separate legal entity, they are likely operating as a general partnership by default, even if they never intended that and never filed any paperwork. In a general partnership, each partner can be personally liable for the debts and obligations of the business, including those created by the other partner.

A partnership agreement defines the terms of the business relationship before problems arise. It covers who owns what percentage, how profits and losses are divided, who has authority to make decisions and enter into contracts on behalf of the business, what happens when one partner wants to leave, and how disputes between partners are handled. It can also address capital contributions, what each partner is expected to contribute in terms of time and effort, and how the partnership can be dissolved if necessary.

For businesses operating as LLCs with multiple members, much of this same ground is covered by the operating agreement. But for partnerships that have not yet formed a separate entity — or for limited partnerships with both general and limited partners — a clear, written partnership agreement is not optional if you want the relationship to be sustainable. Business partnerships that start on the basis of trust and shared enthusiasm are common. Business partnerships that end in expensive disputes because the terms were never written down are equally common. The partnership agreement is the document that stands between those two outcomes.