Does an Llc Need a Partnership Agreement

If you have recently started an LLC (Limited Liability Company), congratulations! You have taken a big step towards establishing a legal entity for your business. However, as a business owner, you need to ensure that your LLC operates smoothly and protects itself from possible disputes or legal issues. One way to do so is by having a partnership agreement.

So, does an LLC need a partnership agreement? The answer is yes.

What is a Partnership Agreement?

A partnership agreement is a legal document that outlines the rights, responsibilities, and expectations of each member of an LLC. It governs the relationship between the members of an LLC, and it can be customized to fit the unique needs of your business.

Even though it is called a partnership agreement, it is not just for businesses with multiple partners. Single-member LLCs can also benefit from having a partnership agreement. It can help provide clarity on the business`s operations and help protect the LLC`s limited liability status.

Why Do You Need a Partnership Agreement?

Having a partnership agreement can:

1. Define Ownership of the LLC:

The partnership agreement outlines the percentage of ownership each member has in the LLC. It also explains how profits and losses will be distributed among the members and how decisions will be made.

2. Protect Members:

The partnership agreement can outline how members can join or leave the LLC, making the process smoother. Additionally, it can help avoid disputes by outlining how decisions are made and what actions can be taken if a member breaches the agreement.

3. Clarify Business Operations:

The partnership agreement can outline the responsibilities of each member and how the LLC will be managed. It can also outline what happens if a member dies or becomes incapacitated.

4. Help Protect the LLC`s Limited Liability Status:

The partnership agreement can help show that the LLC is operating as a separate legal entity, rather than an extension of its members. This can help protect the LLC`s limited liability status, which is one of the main reasons people choose to form an LLC.


A partnership agreement is essential for any LLC, regardless of the number of members. It can help protect the LLC and its members by providing clarity on ownership, responsibilities, and expectations. Without a partnership agreement, LLC members could be exposed to potential disputes and legal issues.

If you`re unsure about how to create a partnership agreement, it`s best to consult a business attorney. They can guide you through the process and help ensure that the agreement is legally sound.