General Partnership Agreement for Virginia

General Partnership Agreement for Virginia



This GENERAL PARTNERSHIP AGREEMENT (the "Agreement") is entered into on _____________ by and between, and _____________ (each a "Partner" and collectively referred to as the "Partners" or "Parties"). Each Partner hereby agrees to the following terms and conditions:

Section I
Partnership Information

  1. Partnership Name. The Partnership will be known as: _____________ (the "Partnership").
  2. Principal Place of Business. The Partnership's principal place of business will be located at .
  3. Term. The Partnership will begin operations on _____________, and its term will continue . The Partners agree to terminate the Partnership only as provided herein.
  4. Business Purpose. The Partnership's primary business purpose is to engage in any or all lawful business activities for which partnerships may be organized under Virginia law. The Partnership may also do all other lawful things to further its business purpose and conduct any other type of lawful business activity that the Partners may agree on from time to time.

Section II
Ownership and Management

  1. Initial Capital. Each Partner must deposit an initial capital contribution into the Partnership's joint contribution account. Each Partner's initial capital contribution amount will be as follows:
  2. Management. _____________, as managing Partner, is responsible for managing the daily business and operations of the Partnership.
  3. Voting. Unless otherwise noted herein, all decisions concerning the Partnership will be made as follows: _____________ If a Partner is not available to vote on a matter in person, that Partner may cast his or her vote through an agent, by mail, or by other similar means.
  4. Time and Ability. Each Partner agrees to devote to the Partnership so much of his or her time as is reasonably necessary for carrying out the Partnership's business and to use the utmost of his or her skills and abilities to further the Partnership's goals.
  5. Partner Meetings. Regular meetings of the Partners will take place once per at a reasonably convenient time and location for the Partners. A special meeting of the Partners may be called .
  6. Partnership Property. Legal title to any Partnership property, whether real or personal, may be held in the name of the Partnership or in such other name as the Partners determine by vote. If the Partners so vote, Partnership property may be held in their own names or in the names of Partnership trustees or nominees; however, holding property in this manner will be for convenience only and any such property will continue to be treated as Partnership property by the Partners in all respects. No Partner may withdraw any portion of the capital of the Partnership or encumber any asset of the Partnership without the unanimous and express written consent of all other Partners.

Section III
Profits and Losses

  1. Profits and Losses. Net profits will be distributed to the Partners . The net profits of the Partnership will be calculated by an independent public accountant selected by vote of the Partners, and, except as to clear errors discovered within thirty (30) business days after its completion, the accountant's calculation of net profits shall be final and conclusive as to each Partner. The Partners accept responsibility for paying for any taxes, encumbrances, insurance, and other expenses relating to the operation of the Partnership according to the ratios described in this paragraph. Net profits and net losses will be distributed to or borne among the Partners as follows: _____________.
  2. Retention of Earnings. Profits may be retained by the Partnership instead of being distributed for any amount of time that the Partners so vote.
  3. Salaries. Whether or not any Partner is to receive a salary for services rendered to the Partnership and the amount of any Partner's salary will be determined by vote of the Partners.

Section IV
Accounting

  1. Contribution Accounts. All Partners will maintain a joint contribution account to hold money paid to the Partnership by the Partners, including the Partners' initial contributions.
  2. Distribution Accounts. All Partners will maintain a joint distribution account to hold money paid to the Partners by the Partnership.
  3. Banking. The Partners will deposit all capital contributions, revenue, and other funds of the Partnership into any one or multiple banking institutions as the Partners so designate by vote. Each Partner's authority to sign checks from any joint Partnership bank account is as follows:
  4. Accounting Records; Fiscal Year. Adequate accounting records will be created and maintained for the Partnership and all Partnership accounts. Accounting records and books will be kept on an accrual basis and the fiscal year will end on the last day of _____________. Partnership books will include records of income, expenses, assets, and liabilities and will be kept accurate, complete, and open to inspection by any Partner or Partner's agent at all times.
  5. Audits. A complete audit of all Partnership affairs will be conducted at the close of each fiscal year, or more frequently should the Partners so choose by vote, by an independent public accountant selected by vote of the Partners. Except as to clear errors discovered within ten (10) business days after its completion, each audit shall be final and conclusive as to each Partner.
  6. Taxes; Tax Matters Partner. Each Partner is responsible for paying his or her own taxes on distributions received. _____________ is designated as the tax matters Partner for representing the Partnership before the Internal Revenue Service.

Section V
Dissolution and Winding Up

  1. Partner Withdrawal and Dissociation. Any Partner may voluntarily withdraw at any time by giving the other Partner(s) written notice of his or her intention to do so. The Partnership will dissolve upon the dissociation of any Partner, whether due to voluntary withdrawal, death, incapacity, bankruptcy, retirement, termination, or for any other reason, unless the remaining Partners agree to purchase the departing Partner's ownership interest within sixty (60) days of the departure. If the remaining Partner(s) unanimously agree to purchase the departing Partner's ownership interest, the remaining Partner(s) will divide and purchase the departing Partner's ownership interest equally. Should the remaining Partner(s) not unanimously choose to purchase the departing Partner's ownership interest, individual Partners will then have the right to purchase the ownership interest, and each Partner that chooses to purchase will divide the ownership interest equally unless otherwise agreed. If all the remaining Partner(s) unanimously consent, a non-Partner may purchase the departing Partner's ownership interest within thirty (30) days of receiving such consent. If the departure is due to the death of a departing Partner, the estate of the deceased is obligated to sell the departing Partner's ownership interest to the Partnership, and any purchase of the ownership interest will be paid to the departing Partner's executor or personal representative.
  2. Winding Up. Upon dissolution or termination of the Partnership by the unanimous consent of the Partners or otherwise, the affairs of the Partnership will be finalized, the assets of the Partnership will be promptly liquidated, all debts will be paid, and any remaining funds will be distributed according the ratios specified herein.

Section VI
Miscellaneous

  1. Governing Law. The Partnership and this Agreement will be governed by the laws of the State of _____________ exclusively and without reference to principles of conflict of laws.
  2. Notices. All notices between the Partners will be in writing and may be served by personal delivery, fax, email, or certified United States Mail, return receipt requested. All notices will be effective upon receipt by the Partner(s) or upon the fifth day following the notice being mailed, whichever occurs first.
  3. Assignment. This Agreement will be binding and inure to the benefit of the Parties, their personal representatives, successors, guardians, and assigns, but only to the extent that such assignment is permitted by the terms of this Agreement, if at all.
  4. Construction. In this Agreement, the masculine, feminine, and neuter genders will be interpreted to include each other, as will the singular and plural. Headings used herein are for convenience only and will not be interpreted to give any meaning to their respective provisions.
  5. Severability. The Parties have attempted to limit provisions herein so that they apply only to the extent necessary to protect their legitimate business and property interests. If any provision of this Agreement shall be held to be invalid or unenforceable for any reason, that provision shall be considered removed from this Agreement; however, the remaining provisions shall continue to be valid and enforceable according to the intentions of the Parties. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
  6. Spousal Consent. Each married Partner or Partner having a domestic partner agrees to obtain their respective spouse's or domestic partner's consent to the terms and conditions of this Agreement by having such person sign the attached Spousal Consent form.
  7. Entire Agreement. This Agreement, including any attachments, exhibits, and amendments hereto, represents the entire and singular agreement between the Partners pertaining to the Partnership, and any prior agreements, promises, or representations not included herein are void and of no effect.
  8. Amendments. Any amendments, modifications, or additions to this Agreement must be expressly made in a writing signed and unanimously agreed upon by all Partners.

Spousal Consent



The undersigned persons, each being a spouse of a Partner that signed the preceding General Partnership Agreement effective _____________, having read and understood that agreement, hereby consent to all of the terms and conditions contained therein.

Instructions for Your General Partnership Agreement



Partnership Information

When choosing the partnership's name, it is a good idea to make sure that no other company is using a similar business name so as to not violate any federal trade name laws. You can check with your Secretary of State to see which names are already in use. Many states also require that you register any fictitious business name you use (a "DBA" - doing business as). Check your state's Secretary of State website for more information.

With the effective date, you can choose any date that you want the partnership agreement to go into effect. Most partnerships have an indefinite duration, meaning that they will continue forever until dissolved by the Partners or according to the partnership agreement. Although an indefinite duration is most common, you may also choose to specify a fixed end date for the partnership to automatically terminate.

When answering the business purpose, it is best to leave your purpose broad, so as to not limit your operations in the future. However, remember that you can always amend your general partnership agreement in the future if need be. Lastly, use the address of the partnership's primary place of business. If one has not been established yet, you can use the address of one of the Partners.

Partner Information

Here you will simply select how many Partners there are and enter their full legal names. This form builder allows you to include up to six Partners.

Initial Capital Contribution

The total initial capital is how much money the Partners are investing in the partnership to begin operations. The contribution deadline is the date by which each Partner must deposit his or her initial capital contribution.

Ownership

On this step you will enter each Partner's ownership percentage in the partnership. For instance, if there are three Partners and each will own an equal share of the partnership, then you would enter 33.3% for each.

Profits and Losses

Next, you will specify how the Partners will divide profits and losses of the partnership. These are the net profits and net losses the partnership either earns or suffers during each accounting cycle. You can then specify how often any net profits that remain will be distributed to the Partners. The Partners will always have the option of retaining earnings to reinvest them in the Partnership. This is usually a good idea during the initial stages of the business to keep it growing.

Voting

Indicate the voting threshold for making important partnership decisions. Most commonly, each Partner will have an equal vote. However, you may decide to pass votes based on the Partners holding a majority of the ownership interests.

Management

Here you can indicate how the Partners will manage the day-to-day activities of the Partnership. You may wish to designate a managing Partner if only one Partner will manage while the rest act as "silent" Partners.

Partnership Checks

On this step, simply indicate whether each Partner has the authority to write checks drawing on a joint partnership bank account in the name of the partnership.

Accounting

In answering whether you will use cash or accrual accounting, "cash accounting" records revenue when money is received and expenses when money is paid, and "accrual accounting" records revenue when it is earned and expenses when they become due. Most companies use accrual accounting unless they are very small.

Final Matters

The governing law is the law that will control the partnership and settle any disputes between the Partners. Usually, Partners choose the state of their headquarters, but this is not required. It is also recommended that you select to include an arbitration agreement. This will help you avoid the time and expense of settling disputes between the Partners in a formal court of law.

Executing Your Agreement

After completing the steps, print out the agreement and have all the Partners and their spouses (or domestic partners) sign it in front of a notary public. Spouses are required to sign it because the agreement requires that all spouses give up their right to inherit the ownership interest of any Partner that leaves the partnership. Instead, the partnership will have the right to buy out any departing Partner's ownership interest. This helps avoid the messy scenario that can occur if a Partner dies and his or her spouse is forced to become a Partner and have a hand in managing the partnership. Once the document is signed by all the parties involved, simply distribute copies to all the Partners and you are done!

Business Business Formation

General Partnership Agreement

A general partnership agreement is the main document defining how a partnership will function, how decisions will be made, and each partner's role in the business. Many promising businesses have been ruined because they did not clarify these important issues, and using this agreement to lay out the groundwork for the partnership goes a long way to avoiding disputes and problems in the future.

LegalNature's general partnership agreement provides the strongest level of partnership protection available while still allowing you to fully customize it according to the goals of the partnership. Easily and quickly define who the partners are, what their contributions and ownership interests will be, and how profits and losses will be divided. Specify what will happen if a partner withdraws, how any disputes will be resolved, and more!

LegalNature will guide you through each step of the process, making it fast and easy to create a general partnership agreement that you can rely on.

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Our general partnership agreement solidifies the relationship between business partners and is an important tool for laying the groundwork for a successful, long-term business venture.
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