When forming a general (GP), limited (LP), limited liability (LLP), or the most recent limited liability limited (LLLP) partnership in Texas, it is essential to adopt an agreement that informs owners about how the company will be run. While Texas does not require a written agreement between partners, it is valuable for resolving infighting and misunderstandings later.
Your agreement should clearly address finances, as partnerships use a pass-through system for profit and loss, and money often causes conflicts. When you are ready to finalize your business relationship, an experienced partnership agreement attorney at Begum Peláez-Prada PLLC could help with creating a partnership agreement in San Antonio.
A partnership occurs when two or more people start a business together. Depending on the type of partnership, you can protect yourself from the business’s debts, reduce your liability, or eliminate your exposure to incurring the company’s debt. Partnerships also allow you to specify which partners are passive and which are responsible for operations. In San Antonio, there are four types of partnership agreements.
Each partner is responsible for the debts and losses of the business (unless a written agreement allocates this differently), and income is treated as personal for tax purposes.
Limited partners are only responsible for company debts up to the amount of their investment, while general partners are responsible for the business’s debts and daily operations.
Limited liability partnership offers protection from personal liability for business debts.
Limited liability limited partnership allows general partners to rely on outside insurers on issues involving personal liability.
Our award-winning San Antonio managing partners, Sasha Begum and Juanita Peláez-Prada, could help you choose the best entity for your goals and then create a comprehensive partnership agreement.
When creating a San Antonio partnership agreement, you should address basic information, such as:
The partners’ roles should be clearly defined by specifying who will take on daily responsibilities, such as staffing hires and purchases and which partners can contractually bind the company.
Although income and profit are treated like the partners’ personal income, business finances should be handled in a separate bank account, with one partner responsible for overseeing this task using a named accounting method. The partners must also agree on how the profits will be allocated based on their initial investments.
Additional sections should discuss the procedures for admitting new limited or general partners as the business grows, how disputes will be resolved, and how to prevent partners from leaving and becoming competitors. Non-compete clauses are a gray area since the Federal Trade Commission announced its final rule banning them, effective September 2024—with exceptions.
In San Antonio, a partnership agreement must address how and when the business will be dissolved and what happens when one partner decides to retire, breaches their fiduciary duty, or divorces. A partnership interest may be considered property to be allocated in a divorce, and unintended consequences can occur when a disgruntled ex-spouse is awarded a chunk of your business.
While major corporations may be the backbone of the American economy, small businesses are the heart and soul of it. Most U.S. companies are considered small businesses that employ about half of all the nation’s workers.
Your business is just as important. Our experienced team at Begum Peláez-Prada PLLC—led by Sasha Begum, who has almost two decades of business experience—could help charter your company and craft your partnership agreement. Call today to get started with creating a partnership agreement in San Antonio.
