Asnyc05 has some great points for the partnership agreement.As for the business entity, this is the type of business you will form.Here is a list of the different types of business you can form:Sole proprietorshipPartnershipsCorporationsS-CorporationsLLC or a Limited Liability CorporationEach one has different requirements and different levels of protection for yourself.Below is a link to the IRS website which goes more into detail for each business structure.http://www.irs.gov/businesses/small/arti��
The obvious answer is have a lawyer (preferrably), or someone legally capable draft up the agreement.But things to be aware of would include (non-exhaustive list):- Name and address of the business- Nature of the business- Length of the partnership (5yrs, 10 yrs?)- Capital contribution (how much will you each contribute)- Ownership percentages (usually just prorata of contribution)- Division of profit and losses (usually you ll put in a schedule, at the most basic level, it is just prorata your ownership)- Salaries and withdrawals, if any- Goveranance (very important - how will you share/distribute authority? will your partner need your consent to bring on another partner? what kind of decisions (monetary, operating, etc.) can each partner make with and without the other s approval)- Disputes (will you arbitrate or litigate)- Death of a partner or partner withdraws his/her partnership- Causes for termination- Liability recourse?- Representations and warranties (stuff like I, understand that while a partner here I cannot engage in the sale of say, third party fitness products, etc.etc , will not willfully harm the business... )- Non-compete (if you have any intellectual, say a client list - you want to make sure that your partner cannot poach your clients or other intellectual property after s/he leaves - the terms are usually anywhere from a few months to a few yrs)
You didn t indicate what type of business entity you plan to register, but I recommend that you look at an LLC if you haven t already. It has significant advantages as far as protecting your personal assets from any business liabilities.
