A partnership is a relationship that exists between two or more persons who have agreed to carry on business in common and share profits.

You can become a partner either by contributing capital.

This could be fixed such as when you decide to let your house or building be used as an office space as your own contribution to the business.

It can also be by contributing an agreed sum for running of the business.

As a partner, your only contribution may even be your skill, expertise, or even an idea.

In any case, once you are a partner you are entitled to share in the profits of the business based on the agreed sharing formula.

If you do not participate in profit sharing, then you are probably not a partner.

However...

There cannot be a partnership unless there is an agreement to that effect.

The agreement can be oral or written...

It may even be by conduct.

But the moment you are in a perceived partnership business, a documented Agreement becomes necessary.

There is no Automatic Partnership.

There must be some sort of understanding between you and the persons you are in business with.

And it is this understanding that must be properly spelt out from the start and documented to be enforceable(although it's possible to also enforce an oral agreement).

This is because the mere fact that you have contributed cash or other assets to the company does not make you an automatic partner in the business.

An investor is not necessarily a partner although in practice with respect to small businesses most investors want to be partners.

So how do you become a partner?

The existing partners must mutually agree to admit new members.

You must satisfy the terms for becoming a partner in the business.

The terms for admitting new members must be clearly set out in the partnership agreement.

and Where there is no clause in the Agreement as to whether new partners can be admitted, the partnership agreement must be altered to enable the partners admit new partners subject to terms to be agreed upon.

If it's a fresh business...

The intending partners must prepare a partnership agreement with clear terms containing their duties, rights, and liabilities as partners.

Please have it in mind that the Partnership Agreement represents the entire understanding between or among the partners...

And it can be reviewed or altered to suit the specific needs of the business at each point in time.

I hope this was helpful to you?

Reply to this email and let us know how we can help you with your partnership agreements and other things you might need.

Cheers!

-Barinaada.