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The Arkansas partnership agreement is a legal document that materializes the agreement between the business partners regarding their rights and duties in the business organization.
Although the partnership agreement or partnership contract is not a mandatory document to have when establishing a business in Arkansas, the parties still choose to do so. The main reason is that the federal and state laws don’t provide all the details on how a certain business must be organized and leave that to the business partners.
Therefore, by creating the partnership deed, the parties will determine every aspect of how their business partnership will be organized and prevent potential misunderstandings and disputes.
Arkansas Partnership Agreement Types
In Arkansas, you can find the following types of articles of partnership:
Types of Partnership Agreement
General Partnerships (GP): With this type, all partners participate in decision-making, and they are all liable without limits with their personal assets. (§ 4-47-401 — 4-47-408)
Limited Partnership (LP): This is the partnership between the limited partners, who are not able to make decisions but have limited liability, and the general partners, who are able to make decisions and have unlimited liability. (§ 4-47-301 — 4-47-306)
Limited Liability Companies (LLC): Partners can make decisions themselves or authorize a professional manager to make decisions for the company. A partner’s liability is limited to the amount of their investment in the company. (§ 4-32-101 — 4-32-109)
Arkansas Partnership Agreement Requirements
The Arkansas partnership agreement format usually includes the following:
Mandatory Requirements
Information about the partners
Details about the formation and dissolution of the partnership
Information about the contributions of each partner
Description of each partner’s managing rights
Rules on how the profits are distributed between the partners
Rules on how the eventual business losses will be covered