What kind of partnership agreement should 2 people have who established a for profit corporation?

UPDATED: Sep 30, 2022

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What kind of partnership agreement should 2 people have who established a for profit corporation?

My partner and I started a for profit company. We are trying to set up an agreement between us. We are not an LLC; we are registered as a

corporation. Should we do a General Partnership or Limited Liability Partnership? We are both equally invested in the business.

Asked on April 4, 2017 under Business Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

A corporation is not a partnership, whether general or limited: a partnership agreement is not necessary for and has no bearing on a corporation. What you need is an agreement between the two of which addresses issues like authority (how are decisions made? what if the two of your are deadlocked?), taking money out of the corporation (do you draw salaries? if so, how much? or do you just take "distributions"--and if so, when and how much and must both take at the same time, etc.), any other benefits you get (does the corporation provide health insurance? pay for vehicles or phones? etc.), what happens if one wants out of the company (does the other have to buy him out? if so, at what cost or amount?), etc. Think through the potential issues and questions with the help of an experienced corporate or business lawyer; the attorney can then draw up the agreement addressing how to handle those things.

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