Fill in the answers before you go into business together — and find the disagreements while you're still friends.
Who this is for: Two or more people in Ontario starting (or already running) a business together without a written agreement. What you'll get: plain-language prompts to fill in, so you can surface the hard questions now and hand a lawyer a head start on drafting a real partnership agreement.
⚖️ This is a general guide, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.
Before you start: why this worksheet exists
In Ontario, if two or more people carry on a business together for profit, you can become a partnership automatically — even with no paperwork. The governing law is the Partnerships Act. The catch:
⚠️ In a general partnership, each partner is personally liable for the debts and obligations of the business — including those run up by the other partners. If the business is sued or can't pay, creditors can come after your personal assets. A written agreement doesn't remove that liability, but it sets the rules between you, prevents disputes, and is the first step toward deciding whether you should incorporate instead (a corporation can limit personal liability — see the note at the end).
Work through this with your prospective partner(s). Where you disagree, that's the point — better to find it now. Bring your completed worksheet to a lawyer to turn into a binding agreement.
Section 1 — The partners and the business
List everyone going into business together and the basic facts.
Business name: ______________________________
What the business does (in one sentence): ______________________________
Proposed start date: ____________________
Partners:
| Partner | Full legal name | Role / responsibilities |
|---|---|---|
| 1 | ____________________ | ____________________ |
| 2 | ____________________ | ____________________ |
| 3 | ____________________ | ____________________ |
💡 Even if you're "equal" partners, write down who actually does what. Unspoken assumptions about workload cause more partnership fights than money does.
Section 2 — Contributions (what each partner brings)
Partners contribute different things — cash, assets, time, expertise, customers. Capture all of it.
Capital contributions (money in):
| Partner | Amount contributed | When |
|---|---|---|
| 1 | $__________ | __________ |
| 2 | $__________ | __________ |
| 3 | $__________ | __________ |
Non-cash contributions (equipment, property, intellectual property, an existing client list, a vehicle):
- Partner 1 contributes: ______________________________ — agreed value: $__________
- Partner 2 contributes: ______________________________ — agreed value: $__________
- Partner 3 contributes: ______________________________ — agreed value: $__________
Time / "sweat equity":
- All partners work in the business full-time
- Some partners are full-time, others part-time — specify: ______________________________
- One or more partners contribute money only and don't work in the business
⚠️ Watch out: "I'll put in the cash, you put in the work" arrangements feel fair on day one and feel very unfair three years later. Write down what happens if the working partner stops working, or the money partner wants more say.
Section 3 — Splitting profits and losses
Don't assume "we split everything." Decide it on purpose.
Profits will be split:
- Equally among all partners
- In proportion to capital contributed
- By a fixed percentage we agree: Partner 1 ____%, Partner 2 ____%, Partner 3 ____%
- Other: ______________________________
Losses will be split:
- The same way as profits
- Differently — explain: ______________________________
How often are profits distributed? ____________________ (monthly / quarterly / annually / when we agree)
💡 Note the default rule trap: under the Partnerships Act, unless your agreement says otherwise, certain defaults apply (for example, around equal sharing). If you want something different, you have to write it down.
Section 4 — Draws, salaries, and money out
How do partners actually get paid?
- Partners take regular draws (advances against their profit share) — amount per partner: $__________ per ____________
- Some partners receive a salary for active work, separate from profit share — who and how much: ______________________________
- No money comes out until year-end profit is calculated
- Other: ______________________________
Expense reimbursement: Which business expenses can a partner pay personally and be reimbursed for? ______________________________
Section 5 — Decision-making and authority
Who can bind the partnership, and what needs everyone's sign-off?
Day-to-day decisions (ordering supplies, routine hiring) can be made by:
- Any partner alone
- Only certain partners — specify: ______________________________
Major decisions require:
- Unanimous agreement
- A majority vote
- Other threshold: ______________________________
Tick the decisions that need everyone's approval:
- Borrowing money or giving a guarantee
- Spending over $__________
- Signing a lease or long-term contract
- Hiring or firing key staff
- Taking on a new partner
- Selling business assets
- Changing what the business does
Who controls the bank account, and how many signatures are required for payments over $__________? ______________________________
⚠️ Watch out: In a general partnership, one partner can often bind all the partners to a contract a third party reasonably believes was authorized — even if you told that partner not to. Internal limits protect you between partners; they don't always protect you against outsiders. This is one big reason to take agreements (and incorporation) seriously.
Section 6 — Admitting and removing partners
People join and leave. Decide the rules before emotions are involved.
Adding a new partner requires: ____________________ (unanimous / majority / other)
Can a partner sell their share to an outsider?
- No, not without the others' consent
- Yes, but the other partners get a right of first refusal (first chance to buy on the same terms)
Removing a partner — on what grounds? (e.g., serious misconduct, failure to contribute, breach of agreement) ______________________________
How is a departing partner's share valued and paid out? ______________________________ (e.g., independent valuation, a set formula, paid over ___ months)
Section 7 — Death, disability, exit, and disputes
The "what if it goes wrong" section. The most important one.
If a partner dies or becomes unable to work:
- The remaining partners buy out their share (consider funding this with insurance)
- The partnership dissolves
- Their interest passes to their estate as a passive interest
- Other: ______________________________
If a partner simply wants out: How much notice must they give? ____________________
Non-compete / non-solicit: Should a departing partner be restricted from competing or taking clients/staff?
- Yes — for how long and within what area: ______________________________
- No
💡 In Ontario, restrictions on competition are only enforceable if they're reasonable in scope, time, and geography — an overly broad non-compete can be struck down entirely. Get this drafted carefully rather than copied from the internet.
If partners deadlock or have a serious dispute, we will:
- Attempt mediation first
- Use binding arbitration
- Use a buy-sell ("shotgun") mechanism
- Go to court as a last resort
Section 8 — Winding the partnership down
How the business ends, on purpose or by agreement.
On dissolution:
- Assets are sold, debts paid, and the rest split per our profit shares
- One partner has the option to buy the business and continue it
- Other: ______________________________
Who is responsible for filing final taxes and closing accounts? ______________________________
A note on partnership type — and whether you should incorporate
| Structure | Liability | Quick take |
|---|---|---|
| General partnership | Every partner personally liable for all partnership debts | Easiest to fall into; riskiest personally |
| Limited partnership | At least one general partner with full liability; limited partners are passive investors whose liability is capped at what they invested — as long as they don't take part in management | For passive investors, not for partners who run the business |
| Corporation | Generally limits owners' personal liability to what they put in | More setup and cost, but protects personal assets |
💡 A written partnership agreement fixes the rules between you. It does not, by itself, shield your personal assets from the outside world. If liability protection matters — and for most businesses it does — talk to a lawyer about whether you should incorporate instead of, or alongside, partnering. The cost of incorporating is usually far less than the cost of one bad lawsuit.
Final checklist before you see a lawyer
- Every partner has filled this out independently, then compared answers
- You've identified the points you disagree on (and not glossed over them)
- Contributions — cash, assets, and time — are written down with values
- Profit/loss split is decided on purpose, not assumed
- Major-decision and signing rules are set
- Exit, death, dispute, and buyout terms are roughed in
- You've considered whether to incorporate for liability protection
- Booked time with a lawyer to turn this into a binding agreement
How Treadstone Law can help
A handshake partnership is a lawsuit waiting to happen. We help Ontario businesses turn a worksheet like this into a clear, enforceable partnership agreement — and we'll give you a straight answer on whether incorporating makes more sense for your situation.
- Flat fees for partnership agreements and incorporations — no surprise hourly bills.
- Online intake so you and your partners can start from anywhere in Ontario.
- Real people at 1-844-900-1070.
See our Corporate services, check pricing, or start a file online.
This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws, tax rates, and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.