What Should Be in a Florida Business Partnership Agreement?

Starting a business with a partner is exciting, but have you thought about what happens if you and your partner disagree down the road? For St. Petersburg business law attorneys, one of the most common issues we see is partners who launched a company on a handshake, only to discover years later that they never put their expectations in writing. A well-drafted partnership agreement can help address many of these concerns before they become disputes.

Why a Written Agreement Matters

Under Florida law, a partnership can exist even without a formal written document. But relying on default statutory rules is not always ideal. Florida Statute 620.8103 explains that relations among partners are generally governed by the partnership agreement itself, and only fall back to the statute when the agreement is silent. In other words, if you have not addressed a particular issue in writing, state law decides for you. Is that really how you want major decisions about your business to be made?

Ownership and Contributions

A partnership agreement should clearly state how much each partner is contributing, whether in cash, property, or services, and what percentage of the business each person owns. What happens if one partner wants to contribute more capital later? Will that change the ownership split? These questions are worth answering early.

Profit and Loss Distribution

How will profits be shared? Many partners assume an even split makes sense, but that is not always fair if contributions or workloads differ. Your agreement should spell out the formula for distributing profits and losses, along with when and how those distributions will be paid.

Management Roles and Decision Making

Who has authority to sign contracts, hire employees, or make large purchases? Disagreements over day-to-day control are among the most common sources of partnership conflict. Consider addressing:

Voting rights and what percentage is needed for major decisions Day-to-day management responsibilities Whether certain decisions require unanimous consent How deadlocks will be resolved

Planning for Partner Changes

Businesses evolve, and partners sometimes want to leave, retire, or unfortunately pass away. What happens to that partner’s share? A buy-sell provision can outline how a departing partner’s interest will be valued and purchased, which can prevent a surviving partner from being forced into an unwanted partnership with an outside heir or third party.

Dispute Resolution

Even partners with the best intentions sometimes disagree. Would mediation or arbitration work better for your business than heading straight to court? Addressing this in advance can save time and expense later.

Dissolution Terms

Eventually, some partnerships end, whether by mutual agreement or a partner’s exit. Your agreement should describe how remaining assets and liabilities will be handled when that day comes.

Consider Professional Guidance

Every partnership is different, and the right terms for one business may not fit another. If you are forming a partnership or reviewing an existing agreement, our St. Petersburg business law attorneys at Fisher & Wilsey, P.A. are here to help you think through these questions and put a plan in place that reflects how you and your partner actually want to run things. Give us a call to talk about your business and what a partnership agreement could look like for your situation.

Source:

flsenate.gov/Laws/Statutes/2024/620.8103