Kiah Treece

A patent's cost varies depending on its type, complexity, and if you hire an attorney. In general, you can expect the following costs to file a patent: USPTO fee (government): $50 to $700 Maintenance fee (renewal): $400 to $7,400 per year Patent lawyer (search and application): $1,000 to $10,000 Total patent cost: $1,500 to $15,000 For a specific type of patent, expect to pay: Utility patent (product): $5,000 to $15,000 Design patent (aesthetics): $2,500 to $3,500 Provisional patent (utility pending): $1,500 to $3,000 If your business is on a tight budget and cannot afford a patent attorney, consider using an online legal service. provides patent services including a consultation with a USPTO-certified attorney, patent search, and technical drawings by an illustrator. Get started with LegalZoom’s patent services today for $199 to $899, plus federal fees. Common Patent Costs USPTO Fees The United States Patent and Trademark Office (USPTO) is the federal agency that grants US patents and registers trademarks. Regardless of the patent, you’ll pay three categories of fees through the USPTO: filing, search, and examination. The fees collected by the USPTO include: Filing fees between $50 and $700: A USPTO filing fee is related to processing your patent application. The cost depends on factors such as the type of patent and whether you file electronically. Search fees between $40 and $660: These fees are associated with a patent search that reveals existing inventions or applications similar to your invention. Examination fees between $150 and $760: These fees cover the USPTO’s review of your patent application. The USPTO’s Fee Schedule includes a detailed summary of search, filing, and examination fees associated with each type of patent. Patent Maintenance Fees The utility patent requires a renewal fee. Due three times over the life of a patent, the fees range from $400 to $7,400. The cost depends on the size of the business filing and age of the patent. If unpaid, your patent protection expires. The rights under the patent lose enforceability. Consider these renewal costs when applying for a utility patent. Patent Attorney Costs A patent attorney has expertise in intellectual property (IP) law and helps inventors navigate the patent application process. Patent lawyers typically bill their fees hourly, although some work on a flat rate. The hourly rate for a patent attorney varies, but expect the total cost to be anywhere from $1,000 to $10,000. Patent lawyer fees cover: Performing a professional patent search: Your attorney will perform a search of the USPTO database to determine whether your idea is similar to an existing patent or application. Drafting the patent application materials: A patent lawyer will prepare the application materials to include the necessary information and meet the USPTO’s formatting requirements. Negotiating and interacting with the USPTO: Many patent applications involve complex or confusing information. Your patent lawyer may need to communicate with the USPTO to answer questions and provide clarifications. They will also defend your patent if the application is initially objected to or rejected. Types of Patents & How Much They Cost There are two major types of patents: utility and design. You can also obtain a provisional patent, which gives certain inventions patent-pending status for one year. Patent costs depend on the type of patent and the complexity of your idea. Types of Patents at a Glance 1. Utility Patent Cost Utility patents account for 90% of patents issued by the USPTO. They protect the creation of useful products, processes, or machines. For example, Apple has numerous utility patents on its iPhone, making it illegal for businesses to copy or imitate the product without a licensing arrangement. A utility patent cost ranges from $5,000 to over $15,000, including lawyer fees. If properly maintained, it lasts for 20 years. The breakdown of utility patent costs include: USPTO Filing Fees: $75 to $700 USPTO Search Fees: $165 to $660 USPTO Examination Fees: $190 to $760 Maintenance Fee: $400 to $7,400 Lawyer Cost: $3,000 to $10,000 Utility patent applications must include detailed descriptions of how the invention works. Because of the thorough explanations, the application process can be lengthy and expensive. Though expensive, utility patents are necessary for those who want to prevent others from manufacturing, selling, using, or distributing their products or inventions without your permission. Utility patents also require maintenance or renewal fees after three, seven, and 11 years of being in effect. If you’re on a tight budget and cannot afford a patent attorney, consider using LegalZoom to prepare and file your utility patent application. It charges $3,099, plus federal filing fees ($430 to $1720). will ensure your application is correct and file it with the USPTO. It will also follow-up as the application moves through the review process. 2. Design Patent Cost A design patent protects the aesthetics or design of a functional item. For example, Google has a design patent for its homepage because it’s considered a distinct feature of the overall search engine. Design patents cost between $2,500 and $3,500, including patent lawyer fees, and last for 14 years. The breakdown of design patent costs include: USPTO Filing Fees: $50 to $200 USPTO Search Fees: $40 to $160 USPTO Examination Fees: $150 to $600 Maintenance Fee: NA Lawyer Cost: $1,500 to $3,000 A design patent application is simpler than a utility application. It only needs to include an illustration of what the invention looks like with limited text. If you want to protect the appearance, design, shape, or general ornamentation of an invention, like a computer, you need a design patent. A design patent is less expensive than a utility patent. However, you can still save considerable money by using LegalZoom instead of an attorney. For $1,099 plus federal filing fees ($240 to $960), they’ll do a design patent search, prepare your application, and review your design drawings to ensure nothing is inaccurate or confusing. Then, when ready, submits the application to the USPTO. 3. Provisional Patent Cost A provisional patent grants a “patent-pending” status while you develop your invention, secure financing, or prepare your nonprovisional utility or plant application. Provisional patents last for 12 months, during which you must file a nonprovisional application. It may be one of your first legal steps when starting a new business. Obtaining a provisional patent costs between $1,500 and $3,000, depending on the invention's complexity. The breakdown of provisional patent costs include: USPTO Filing Fees: $70 to $280 USPTO Search Fees: Not applicable USPTO Examination Fees: Not applicable Maintenance Fee: NA Lawyer Cost: $1,000 to $3,500 Typically, an inventor uses a provisional patent to protect their idea and give themselves time to develop it further. Or they may need the time to market it to investors. After 12 months, it’s essential to submit a nonprovisional patent application. Otherwise, the provisional patent will expire, and you’ll have to apply for another one. For example, if you filed a provisional patent April 30, 2020, you must file a corresponding nonprovisional application by April 30, 2021. This process increases your cost because you’ll pay for two applications instead of one. LegalZoom has created software to help you navigate the process to file your provisional patent. The software will assist with submitting your invention design to the USPTO for $199 plus the federal filing fee ($70 to $280). All of patent products come with a 100% satisfaction guarantee. How To Reduce Your Patent Costs There are four significant ways to reduce patent costs. You can save money by ensuring your invention is complete before filing an application and by streamlining the process. It’s best to be proactive about the contents of your application, instead of reactive when an issue arises. To reduce the cost of obtaining a patent: 1. Create the First Draft Before engaging a patent attorney, create a first draft of the patent application using an online legal service’s document library. This strategy can reduce the number of billable hours an attorney spends on the document. If you already have an attorney, ask them to provide a template so you can produce a first draft and save on drafting fees. 2. Patent a Complete Invention When you’re developing an idea, it’s tempting to file for a patent before the invention is complete. However, submitting an incomplete invention or design will waste your patent lawyer’s time and increase your legal expenses. Reduce patent lawyer fees by finalizing the details of your invention before filing your application. 3. Thoroughly Describe Your Invention Provide your patent lawyer an extremely detailed description of your invention. This will help avoid confusion, limit back-and-forth between lawyers and the USPTO, and reduce patent lawyer fees. 4. Start With a Provisional Patent If you want to obtain a utility patent but are still figuring out the details, apply for a provisional patent first, saving you money in the short term. This patent will give you time to start your new business centering around your product and develop it. Remember, when you eventually file for a nonprovisional (standard) patent, you’ll also have to pay for those costs as well. Pros & Cons of Getting a Patent Patents are an excellent way to protect intellectual property but aren’t always the best option. There are several advantages of filing a patent, such as increased credibility and a competitive edge. However, the filing process is costly and doesn’t offer permanent protection. Pros of Getting a Patent Security: Makes your investment worth it because it prevents people from stealing your idea. Intellectual property: Once patented, an invention becomes your intellectual property. Competitive edge: Holding a patent ensures that your competitors cannot legally use the same design or rely on the same functionality as your invention. Credibility and business value: A patent can improve your chances of selling an idea or service based on your invention. It prohibits competitors from stealing your IP. Revenue: Though not required to sell a product or service, patents give inventors rights to revenue from licenses to their inventions. Cons of Getting a Patent Lengthy application process: The application process for obtaining a patent can last several years. Liability/patent defense: When you obtain a patent, you become responsible for defending it. Transparency: Filing for a patent requires you to make every proprietary detail of your invention public. Limited coverage: A patent only gives you rights to the specific product described in the patent. Maintenance: Maintenance fees are required at three times during the life of a patent and add to the overall cost of a patent. Frequently Asked Questions About Patent Costs What Is a Poor Man’s Patent? A poor man’s patent is a document containing details of your invention that you mail to yourself and keep unopened. The patent applies the first-to-invent approach and uses the letter’s postmark as the invention’s conception date. The first-to-invent system was replaced with a first-to-file rule in May 2013, rendering the poor man’s patent obsolete. Should I Get a Provisional or Nonprovisional Patent? We recommend provisional patents as a lower-cost way to protect intellectual property while developing an invention. They’re a great way to protect inventions while completing development, arranging financing, or preparing the nonprovisional application. Though more inexpensive than a nonprovisional (standard) patent, they only last for 12 months. You’ll still have to pay for a nonprovisional application. How Do I Find a Patent Attorney? If you need a professional to guide you through the patent application process, consider Rocket Lawyer’s Find a Lawyer feature. On the website, choose “Copyrights, Trademarks, and Patents” in the pulldown menu and select your state. Rocket Lawyer will provide contact information, qualifications, and standard fees for local patent attorneys. How Much Does It Cost To Patent a Name? It is impossible to patent a name because patents are only appropriate for inventions, designs, and plants. If you’d like to protect a name, learn more about trademarks vs patents and if you should follow through with the trademark process. What Is a Plant Patent? Plant patents make up 0.3% of all patents granted. They are for newly-invented plant types that are reproduced under certain conditions. These patents do not apply to bacteria, as well as some types of plants. The average cost of obtaining a plant patent ranges from $4,500 to $8,000, including patent lawyer fees, and they last for 20 years if properly maintained. Bottom Line Before approaching a patent attorney or online legal service, it’s best to learn as much as you can about patents. Consider drafting up your own patent first with a standard patent template. Even a little knowledge will help you have a more effective conversation with an attorney. Additionally, by drafting the basics of your patent application, you may save an attorney time and pay fewer billable hours.

Bar marketing is the process of promoting your bar to your intended audience; effective bar marketing attracts customers and encourages brand loyalty. To market a bar effectively, create a culture and offer promotions that attract loyal patrons. Bar marketing also requires developing word-of-mouth and creating an online presence with social media and review sites, which is not as easy as it sounds. You’ll need to do things like consistently post highly targeted content for your audience, monitor the analytics and adjust where necessary, make sure all your content is visually appealing, and more. Here are the five steps to follow when marketing your bar: 1. Identify Your Target Market Your bar’s target market is the ideal group of consumers you’re trying to attract. To identify your market, consider the characteristics of your local population, preferred clients, and foot traffic near your location. This involves creating an ideal customer profile based on demographic and psychographic data, and shaping your bar marketing strategy around their preferences. The ways to identify your target market include: Demographic Data Demographic data includes information about the physical characteristics of your target market. Relevant characteristics include age, gender, education, occupation, and income. Obtain this information by thinking about the characteristics of your current customers and taking time to learn more about their backgrounds and roles in your community. Psychographic Data Psychographics are the mental characteristics of your customers and preferred clientele. This includes behavior and beliefs like personality, hobbies, style, and humor. Familiarize yourself with these characteristics by talking with your customers and engaging with your community. Important considerations when evaluating this data include why people visit your bar and what customers are looking for when they choose your bar over another establishment. Once you collect demographic and psychographic data, use the information to create a client profile that describes your bar’s ideal clientele. From there, you’ll be able to determine the best products, marketing, and promotions to reach those customers. No matter how you identify your target market, always ask yourself whether your preferred customers will actually benefit your business. To do this, consider how many people in your target market live within close proximity to your bar, have the financial resources to support your business, and easy to access with marketing materials. If you need more guidance on how to create a client profile, check out our how-to guide for creating a client profile—it includes tips and a template to simplify the process. 2. Create Your Bar Culture Your culture is the type of experience you create at your bar and should be based on the customers you’re targeting. Bar promotions are the methods used to attract those customers, like events and giveaways. Establish a bar culture so you can choose promotions that jive with your bar’s atmosphere and entice new customers. Define Your Bar Experience What kind of bar experience are you creating—a high-end wine bar with a lounge atmosphere, a noisy sports bar with big screens, or a dive bar with loud music? The more overt your bar’s experience, the more memorable your culture and the easier it is to attract your desired audience. Define your bar’s experience to craft a targeted culture for your patrons. Here are some of the traditional types of bars and bar experiences: Dive bar: Dive bars are come-as-you-are local bars that possess an intrinsic charm and rabidly loyal customers. There’s no single definition of a dive bar, but they often have strong character, tasty food, unique quirks, and low prices. Sports bars: Sports bars allow patrons to view sporting events, usually on multiple large screen TVs placed around the bar. Sports bars have year-round appeal depending on whatever sport is in season and can get really busy during major events such as the Super Bowl or World Series. Nightclubs: Clubs or discos are popular among younger populations and often feature great music, talented DJs, and a dance floor. Places like Las Vegas, Ibiza, and Miami are well known for a buzzing nightlife scene due to their concentration of nightclubs. Cocktail lounge: Usually bars like these are upscale and may be part of a hotel or restaurant. The atmosphere is lounge-like and subdued, and the bar may offer wines and signature cocktails. Cigar bars: Cigar bars allow customers to mix cigar smoking with drinking. Many city ordinances ban smoking in public places, but cigar bars have legal exceptions and feature humidors as well as beverages. Music bars: Music bars feature live music. While some music bars feature an eclectic array of musicians and groups, other music bars specialize in types of music such as blues or salsa. Although these are common bar types, your own bar experience may morph between different types depending on your style and the patrons you want to attract. Local bars tend to blend elements of different bar experiences, so you may want to bring out the karaoke equipment on some nights and create a sports experience on others to create an eclectic and unique culture. Schedule Regular Bar Promotions Bar promotions include events, discounts, and theme nights that help define your culture and attract your ideal customer. Your bar’s promotions should complement the culture and clientele. Sports bars can focus on local team-oriented promotions, while music bars can rely on live bands or karaoke nights. Plan your bar’s promotions to follow a regular schedule based on the season or day of the week and post them on your website and social media pages. A bar’s promotions should be a reflection of its culture and target market. For example, if you have a music bar, feature different genres of music or live bands each night of the week. Sports bars can choose a promotion schedule based on popular teams by running March Madness bracket challenges, college football-themed drink specials, or National Signing Day promotions. General bar promotion ideas include: Sports bars: Sport-themed drink specials, price cuts based on home-team performance, jersey night, bring-your-friend half-off specials Music bars: Karaoke night, pick your own song, Metal Monday, free jukebox picks Drink specials (for any bar): Offer discounted prices for specific drinks or quantities of drinks. Create a signature cocktail for your location or city, or simply tweak and rename an existing local favorite cocktail Food specials (for any bar): Shrimp night, burger night, all-you-can-eat wings night—choose a food to promote and discount to drive up sales and encourage visits Games (sports, music, or dive bars): Raffles, competitions, billiards night, ping pong night, darts night, etc. Create your culture and establish popular promotions, but stay flexible. As your bar attracts different patrons and their friends, the atmosphere might change. Your goal is to adapt and serve your target audience while remaining an authentic place where people can come to have a good time. Check out our 10 bar bar promotion ideas below. “Sometimes you create a framework for things, but then it takes on a life of its own. The drink specials aren't the main selling point. The main thing is the atmosphere and the music. It's more about the vibe and the people.” - Wes Gilliam, co-owner, Radio Room (photo by Will Crooks) 3. Create an Online Presence Your bar’s online presence is a primary way people will discover, visit, and review your bar. Create profiles on Google, Facebook, Instagram, and Yelp to start developing your online presence by targeting your ideal customer and using the platforms to announce bar events and promotions and encourage the right kind of people to visit and review your bar. Make sure you do the following when creating an online presence: Design an Informative Website Your bar’s website doesn’t have to be complex, but it should include important information like location, hours, and events. Potential customers will rely on your website to decide whether to visit and regulars will use it to discover events and promotions. Create an eye-catching website to attract new customers and share information with your target audience. Information to publish on your website includes: Location: Include your bar’s address and the location of your parking lot or other public parking. Customers should be able to use this to locate your bar with Google Maps or another mapping function. Hours: List your normal business hours and information about holiday- or event-specific hours. If you are only open seasonally, include this information on your website too. Menu: Provide a downloadable PDF of your menu, beer list, and specialty cocktails. Event calendar: Keep an up-to-date calendar of live music, promotions, specials, and other events. Press kits: A press kit can be event- or promotion-specific, or simply share general information about your bar. Check out our press kit template to learn more about how to create one for your bar’s services and events. When you design your bar’s website, use a website builder that will simplify the process. is a website builder that comes with templates prefilled with text and industry-specific images, web hosting, and a free domain. It also includes business email accounts, so you can leave a good impression by sending emails from “you@yourbarname.com” instead of “you@gmail.com.” Pricing starts at as little as $1/month. . Get on Google My Business Sign up for Google My Business in order to get your bar listed on Google’s massive business directory and in maps listings. Listing your bar on Google My Business is what lands you in the “local pack” and puts you into Google Maps when people search for your bar or related terms. Remember to fill out your bar information completely. By adding pictures, identifying your establishment as a bar, listing price ranges, bar hours, address, etc., you will create an appealing and clickable profile on Google. Encourage your customers to leave positive reviews on Google because this will improve your search rankings. For more information, check out our article on how to get on Google My Business. Create Your Facebook Business Page Create a Facebook Business Page for your bar to gain visibility and online exposure and share details about your location, hours, and promotions. Facebook pages are great because they give you greater presence, additional reviews, and social buzz. Friends can easily recommend your bar, tag your bar in posts, and encourage others to visit using Facebook. Once you create a Facebook Business Page, share photos, videos, or updates once a day. You can announce the night’s theme (e.g., Michelob Monday - Half off all Michelob Beer), post pictures of your bartenders, or just a funny beer meme. As budget allows, start promoting posts and running Facebook ads to give your bar’s events and promotions more exposure online. For more information on how to optimize your bar’s Facebook Business Page, check out our step-by-step guide to creating a Facebook page. If you’re interested in learning more about Facebook marketing, check out our how-to guide on free Facebook marketing techniques as well as our article on how to advertise on Facebook. If you want personalized assistance with creating and maintaining your bar’s Facebook presence or to design your Facebook photos and images, try , one of a select few official Facebook Marketing Partners. It helps you draft posts, manage promotions and ads, and more. . Sign Up for Yelp Yelp is the foremost review site online, with over 140 million visitors each month and more than 148 million reviews posted. Because Yelp is such an influential review site, you should create a business profile and keep it updated. Then, ask customers to leave reviews to improve word-of-mouth advertising and increase new business. To sign up for Yelp, simply visit their website, enter your information, and fill out your business profile. The process takes less than thirty minutes and gives your bar instant visibility on the Yelp network. Be sure to fill out your Yelp profile thoroughly—name, detailed address, phone number, website link, bar hours, bar menu, high-quality photos, etc. The more information you put into your business profile, the better. Once you have a Yelp profile, personally ask customers to review your bar on Yelp or place a request on a sign or on receipts. According to Harvard Business School research, higher star ratings on Yelp produce massive increases in revenue, so it’s in your best interest to work hard for great reviews. Take a look at our guide to using Yelp to find out how to get the most out of the platform. Actively Monitor Online Reviews Each of the platforms described above allows customers to leave reviews of your bar—star ratings with a description of the customer’s experience. These online reviews are important because they’ll either encourage or prevent future customers from visiting your bar. You should read these reviews and make any necessary adaptations to your bar culture or promotions. If you receive negative reviews, the best thing to do is respond to the reviewer, make it clear that you understand the concerns, and are taking concrete action to improve in that specific area. If you receive positive reviews, it’s appropriate to thank the reviewer. Stay aware of all reviews in order to understand how your bar is being perceived by your customers. Ultimately, you want to be wherever your customer is engaging and make sure you have a positive presence there. Check out our guide to the best social media sites for more information about which platforms are best for your bar. 4. Encourage Word-of-Mouth Marketing Word-of-mouth marketing involves encouraging people to recommend your bar to their friends and acquaintances, but make sure you already have an online presence in case people look you up. Word-of-mouth can be your number one source of customers, but it’s only as effective as your bar is appealing. Harness your bar’s culture and promotions to establish your identity as the music bar, sports bar, or karaoke bar in your area, and word-of-mouth will spread like crazy. About 88 percent of customers place the highest level of trust in recommendations from friends, and word-of-mouth impressions drive five times more sales than paid media. If done correctly, the right bar culture and promotions will drive word-of-mouth marketing to your desired audience, but there are some proven methods that will accelerate word-of-mouth marketing for your bar. Here are some of the ways you can encourage word-of-mouth marketing: Give Away Bar Merchandise Bar merchandise includes items like branded shot glasses, koozies, T-shirts, and hats. Give away merchandise as prizes during promotions, as a reward for loyal customers, or to entice customers into your bar on slow nights. If your bar doesn’t have its own branded merchandise yet, your beer and liquor distributors and local breweries may provide free pint glasses, shirts, or other items to give away. Craft Unique Experiences Few people choose a bar simply because of its beer. Instead, people go for the experience, the culture, and the vibe. The greater emphasis you put on having a good time, the more your bar will benefit from word-of-mouth marketing. Decorate your bar, create signature drinks, and schedule live music and promotions in a way that gives customers a unique experience they’ll return to again and again. Offer Discounts Offering discounts on drinks or food is a surefire way to spread the word about your bar. Obviously, you can’t rely on price slashing alone to market your bar, but it’s one method to combine with others. Try offering drink discounts during an established happy hour or running promotions on different drinks each night. Engage Employees Word-of-mouth marketing is all about getting other people to market your bar for you. The best people for this task are your own team members. Incentivize your employees to spread the word about your bar by giving bonuses, free drink tickets, and merchandise to those who bring in the most new customers. Just make sure you treat your employees fairly and respectfully to earn their loyalty and keep it. Network “Networking” in a bar marketing context doesn’t require the handshaking methods of conventional networking, but it should involve getting face-to-face. Be friendly with your customers and employees, and you should foster relationships with other bar owners in your area. Networking with fellow business owners will help your reputation in the community and broaden your professional resources. The bar owners we interviewed suggested contacting owners of other local bars and visiting their establishments. Bars possess a unique culture that appeals to a certain type of customer, so you don’t have to worry about competition when networking. Owners of other bars in the community will likely return the favor and may even recommend your bar to their friends and acquaintances. Sponsor Local Sports & Rec Teams Sponsoring a local sports team can involve providing branded jerseys, T-shirts, and other swag to a local intramural team as a way to advertise your bar. Build relationships with local universities and companies and let them know you’re open to sponsoring their teams. This is an easy way to grow your business and exposure in the community—just make sure they come to your bar for a celebratory drink after their games. 5. Develop a Social Media Strategy Your social media strategy is the ongoing promotion of your bar through social channels. Use social media platforms like Facebook and Instagram to promote events, share drink specials, and engage potential customers. A social media presence gets your bar in front of the community, helping old customers remember you and new customers discover you. The two most effective ways to use social media for marketing your bar include: Communicate Using Facebook The majority of American adults are on Facebook, so it’s likely your bar’s target customers are already on the platform. Set up your page to include basic information about your bar, share event and promotion details, and take advantage of paid advertising opportunities. Optimize your bar’s Facebook page to reach your targeted market quickly and effectively. There are four specific actions you should take once you claim your Facebook Business Page: Post regularly: Once a day updates are the minimum. Use a variety of videos, pictures, and text updates to keep your bar audience informed. Your Facebook posts will convey your bar culture. Respond to messages: Facebook allows people to send messages through Facebook Messenger. Be sure to respond to these messages as quickly as possible, since your response rate and time will be publicly displayed on your Facebook profile. Monitor reviews: Like Yelp and Google, Facebook is a major review site. Be sure to read each review and make any necessary changes. Pay for advertising and boosts: Facebook advertising allows you to reach a highly targeted audience in your local area. Take a portion of your marketing budget (e.g., $1,000) and use Facebook advertising for at least a month to see if Facebook advertising is an effective way to reach your audience. For more information about how to advertise on Facebook, visit our review of the best Facebook advertising agencies. If you want more help with setting up and managing your bar’s Facebook page, let help you craft targeted ads that will attract the best customers for your bar. “Word-of-mouth is still definitely the best form of advertising. Facebook, though, is second.” - Wes Gilliam, co-owner, Radio Room (photo by Will Crooks) Share Pictures on Instagram Instagram allows you to advertise your bar’s drinks, events, and promotions through enticing photos and optimized hashtags. Publish a post on Instagram at least once a day and post three to ten Instagram stories to keep engagement high. Include geotags and popular hashtags in your posts and stories to increase your bar’s exposure. Instagram is particularly important for your bar if you want to reach a Millennial audience. The platform is so important to Millennials that 30 percent of 18- to 35-year-olds avoid restaurants without a strong Instagram presence. The same age bracket is estimated to spend five days a year browsing food images on the platform. In addition to Facebook and Instagram, your bar can benefit from other social media platforms like Twitter, Pinterest, and Snapchat. As you grow your social media presence, experiment with other platforms to see what works best for your community and target market. Just remember it’s important to first focus on the outlets that give you the biggest return on investment. If you’re not sure how to kick-off your social media marketing campaign, hire a professional digital marketing service, like . Hibu is one of very few official Facebook Marketing Partners, and will create and maintain your Facebook accounts. It also monitors analytics and adjusts your campaigns accordingly, to make sure you reach the right audience for your bar. . 10 Bar Promotion Ideas Bar promotions can go beyond traditional methods by infusing your marketing scheme with potentially viral and attention-grabbing ideas. Although it’s important to focus on the basics when marketing a bar—getting on the right platforms and building your online presence—you should stretch yourself and get creative to attract the most high-quality customers. Here are 10 creative ideas to get you started: Pay-your-parking ticket night: Few things are more frustrating than getting a parking ticket. Boost the mood and grow business by offering to pay off the parking ticket of anyone who brings in an unpaid parking ticket dated within the last week. Be sure to provide stamps and a mailbox to ensure the ticket does get paid. Celebrate a totally random event: Patrons come to bars to get social, have fun, and take their mind off their troubles. Pick a night to celebrate a random event—Hottest Day in May (with discounted margaritas), half off Samuel Adams beer on the anniversary of Samuel Adams’ death (October 2, who knew?), or just pick a night for Zombie Appreciation Day (with some sort of zombie-related discount). Offer gift cards for game winners: A lot of bars have games, so why not reward the winners with a gift card? Adding gift card rewards encourages healthy competition and heats up business by creating repeat customers. Host events: Your bar can increase traffic without doing the heavy lifting involved with planning or advertising your own unique events. Let local organizations, universities, and companies know that your space is available for their events to increase sales and gain new customers. Flip-a-Coin penny night: When customers order a beer on tap, they get to flip a penny. Heads, the drink costs a penny; tails, they pay full price. Sponsor Release Parties: Sponsoring a local band or artist who is releasing a new album is a great way to bring in patrons who might not otherwise frequent your bar. The more buzz you and the band generate around the album release, the more visitors your bar will be able to welcome. Run bar rallies for hometown teams: To generate team goodwill, offer free drinks if the hometown team wins by more than 10 points or if everyone’s favorite home team player sinks a three-pointer in the fourth quarter. Just choose a promotion and reward that will keep patrons in your bar as long as possible. The longer they stay, the more they’re likely to spend. Purchase custom mugs for super customers: Once a customer purchases their one-hundredth drink, it’s time to celebrate. Order a custom engraved mug with the customer’s name on it. Whenever they show up at the bar, pull down their stein and give them their first drink half off. Host Bar Olympics: Instead of the ho-hum drone of games in the background, pump it up to Bar Olympics—a full spread of bar games from beer pong to billiards. Host all your games during one big night of revelry and liberally distribute rewards like branded T-shirts and pint glasses to winners. Create a bar newspaper: In addition to maximizing your bar’s online and social media presence, publish your own monthly newsletter to promote bar events, live music, and other local businesses. Use this as a way to promote your bar while building a positive reputation in the local community. Bottom Line - Bar Marketing in 5 Steps Bar marketing begins with identifying your target market and developing a strong bar culture to match. Then create promotions to appeal to your regulars and grow your clientele. Word-of-mouth is the most effective form of marketing for bars, but it’s also essential to create an online presence and promote your bar on social media.

An LLC operating agreement is a binding contract between members describing how profits and losses are shared and whether your LLC is member- or manager-managed. It serves to resolve member disputes, dictate responsibilities and more. Operating agreements aren’t always required by law but have an attorney or legal service draft one to include in filing documents. is a good alternative to hiring an attorney to help you make legal decisions for your LLC. If you want to save money on hourly attorney fees, check out Rocket Lawyer. You can get access to operating agreement templates, document review and attorney consultations for $39.99 per month. . Free LLC Operating Agreement Templates This free operating agreement template includes eight articles with all of the information necessary to outline your LLC’s ownership and member duties. Important sections include your company’s management and tax structure, dispute resolution terms and other information to guide operation of your company. Use these free LLC operating agreement templates to clarify the organization of your LLC and retain control over LLC management, taxation, profit sharing and more. Single-member LLC operating agreement (.DOCX, .PDF, Google Doc): Select this template if you’re the only owner of your company. Member-managed is the most common structure for a single-member LLC, but you can also choose a manager-managed structure using the single-member template. Multi-member LLC operating agreement (.DOCX, .PDF, Google Doc): Choose this template if your company has several owners. Use the manager-managed language if your company will be managed by a group of managing members or a third-party manager; otherwise, use the template’s member-managed language. The templates above are a great starting point if you want to formalize your LLC’s management structure but don’t want to spend money using a law service. If you have a more complex company or want to ensure you’re following all your state-specific rules, you may be better served by an LLC operating agreement from . You can get access to operating agreement templates, document review and attorney consultations for $39.99 per month. Identify Your Members LLC members are the people with a legal ownership interest in your company. LLCs can have one or several members, and the format of your LLC operating agreement depends on this distinction. Identify your LLC’s members in the Articles of Organization you file with your state and make sure your operating agreement reflects that structure accurately. Single-member LLCs A single-member LLC is an LLC where one individual or entity owns 100 percent of the company. Operating agreements are most helpful in avoiding disputes between multiple members, but an agreement can provide benefits to a single-member LLC by overriding state default rules for how the LLC will be governed in the absence of an agreement. However, if you default you’ll have to comply with state-specific default rules regarding management and member authority. In addition to avoiding the uncertainty of default rules, having an operating agreement will help cement your limited liability status by separating your LLC from you as an individual. One of the hallmarks of an LLC is that its members are not personally liable for the debts and other obligations of the company. However, in the absence of an operating agreement, your LLC may look more like a sole proprietorship than a company with limited liability status. Use our single-member template if your company only has one member. Within the template, you’ll denote that your LLC is managed by you as a member or by a third-party manager. Choose the template language that best suits your LLC’s structure. Multi-member LLCs Operating agreements are most helpful for multi-member LLCs because they set forth the ownership, management and voting structure of your company. The legally binding document reduces the potential for disputes between members by establishing each member’s authority and clarifying voting rights, profit sharing and what will happen if a member decides to leave the company. We recommend having an operating agreement for your multi-member LLC to avoid disputes between members and provide for quick, predictable resolution in the case a dispute arises. Establish the capital contributions of each member, identify voting rights and define what will happen if a member leaves the company. Use our multi-member template if your LLC has two or more members. A multi-member LLC is one with multiple owners. Within the template, you’ll denote that your LLC is managed by a member, a group of members or a third-party manager. Choose the template language that best suits your LLC’s structure. For more information, check out our article describing LLCs and how to file for one. If you’re ready to organize your LLC with the state, check out our guide to filing for an LLC with your secretary of state. Whether you have a single- or multi-member LLC impacts the format and content of your LLC operating agreement. Multi-member LLCs are more complicated and require sections about dispute resolution, voting rights and more. If you’re forming an LLC and need help drafting your operating agreement, team of on-call attorneys can help. 2. Article I: Summarize Important Company Information Once you determine your ownership and management structure, organize the details of your LLC. The purpose of Article I is to describe your LLC, so include things like your name, primary address and registered agent. Include specific details in Article I of your eight-article operating agreement to properly identify your company. Important terms to include in Article I of your operating agreement are: LLC name: Insert the exact name used by the secretary of state’s office to identify your LLC. Registered agent: Provide the name and address information of the person or business you selected as your registered agent during formation of your LLC. Check out our guide to registered agents for help choosing one that’s right for your LLC. State of formation and primary address: Your LLC’s filing state will determine whether you have to file your operating agreement with the secretary of state’s office. Term: Maintain flexibility in your single-member LLC by enabling the member to dissolve the company at any time. If you have a multi-member LLC and want to limit when members can dissolve the company, include more specific conditions like a vote by a majority member or events making the business of the company unlawful. Continuance: State that if there is at least one remaining member of the company, that member can choose to continue the business of the company. Purpose: Include a statement of purpose in your operating agreement. Depending on your state, this statement can be very broad, like "conduct any and all lawful business” but should be consistent with the purpose included in your Articles of Organization. Principal place of business: Your primary address from which your LLC will operate. Some states require your primary place of business to be within the borders of the filing state, so check your secretary of state’s website for local requirements. Member name(s): Members are the owners of your company. Identify one or more of your members to begin your draft of the operating agreement. How to add members: In this section, describe how new members may be admitted to the company. For example, you may specify that no members can be added without the unanimous written consent of the existing members. 4. Article II: Detail Capital Contributions Initial contributions are the cash or property each member contributes to the LLC at formation. Record each member’s contribution in the operating agreement and, where appropriate, identify their percentage of ownership in the company. Generally, describe the total contributions in Article II of your operating agreement and list the detailed contributions in an exhibit. Generally, initial contributions are in exchange for a portion of ownership in the company. A contribution in exchange for ownership is called a capital interest and is typically equal to the percentage of the company a member owns. To complete this portion of the operating agreement accurately, include the total amount of each member’s contribution and details about how it’s allocated in an exhibit. 5. Article III: Describe How Profits & Losses Are Shared Article III details how profits and losses will be shared among members. Generally, profit allocation in a multi-member LLC is determined based on each member’s ownership percentage as identified in Exhibit 1 of your operating agreement. However, operating agreements give you the flexibility to change percentages and determine when profits will be distributed to the members. Designate Profits & Losses A company’s profits and losses are the money raised and lost in a given year. These amounts can be shared between LLC members depending on their ownership interest or other factors identified in your operating agreement. Document how profits and losses will be shared in your operating agreement in case anyone’s financial responsibilities are questioned. As the sole member of an LLC, you’ll receive 100 percent of profits and bear 100 percent of losses. However, with a multi-member LLC, it’s more important to detail the sharing of profits and losses in your operating agreement. List members in the agreement and identify their portions of profits and losses, making sure that everything adds up to 100 percent. Generally, percentages align with each member’s ownership interest in the LLC, but you can choose any numbers if your members agree. Describe Distributions LLC members don’t receive a salary for the work they do for the company. Instead, they receive distributions based on the company’s profits and losses. Use your LLC’s operating agreement to determine if your members will receive distributions quarterly, annually or at another frequency that makes sense for your company. If you want to keep a flexible distribution schedule, include language in Article III of your operating agreement specifying that available funds should be determined and distributed annually or at more frequent intervals as the members see fit. Be sure to have your distribution schedule reviewed by a certified public accountant or tax attorney to make sure you’re meeting IRS regulations and filing the necessary forms. Choose a Tax Structure The default LLC tax structure is that of a sole proprietorship or partnership. However, under certain circumstances, you can change your tax structure to that of a C corporation or S corporation by filing with the IRS. Whether you’ve already filed your LLC with the state or are planning to organize in the future, include the appropriate language in Article III of your operating agreement. In general, the ways an LLC may be taxed include: Sole proprietorship/partnership taxation: By default, LLCs are taxed as sole proprietorships or partnerships, depending on the number of members. This means LLCs don’t pay their own taxes because profits are reported on individual member tax returns. If you plan to retain the default taxation structure for an LLC, you don’t need to include any specific language in Article III of your operating agreement. Corporate taxation: In contrast, corporations pay taxes twice: once on corporate net profits and again on dividends as part of members’ personal tax returns. You can elect for your LLC to be taxed as an S corporation or C corporation, which offer distinct advantages under certain circumstances. Consider corporate taxation if your members have business responsibilities that aren’t aligned with their ownership shares. Check out our comparison of LLCs, S corps, and C corps to help decide what’s right for your LLC. If you think you may want your LLC to be taxed as a corporation in the future, include language in Article III of your operating agreement to give yourself this option. Do this by stating that members may elect to be treated as a C corporation at any time. The differences between LLC tax structure are very nuanced, so consult with a tax professional to help you decide what’s best for your company. Choosing your LLC’s profit distribution and tax structure will have a substantial impact on your company’s finances. We recommend hiring an attorney or tax professional to help you make financial decisions for your LLC. However, if you want to save money on hourly attorney or CPA fees, check out monthly membership plan and consult with one of their On Call attorneys. 6. Article IV: Choose a Management Structure The majority of management-related language goes in Article IV of your operating agreement and depends on how your LLC is managed. In member-managed LLCs, all of the members can make decisions; manager-managed LLCs restrict management to managing members or a third-party manager. Include language specific to your management structure in Article IV of your operating agreement. The two LLC management structures include: Member-managed LLC A member-managed LLC gives every member authority to bind the company. Under this structure, all of your company’s owners can open bank accounts, sign contracts and make other decisions that bind the company. Choose this structure if you’re comfortable with all of your LLC’s members playing a role in the day-to-day management of the company. If you have a single-member managed LLC, Article IV of your operating agreement will be brief. This section should state the member’s powers, that the member will manage the LLC, and that the member has powers to sign contracts, set up bank accounts and otherwise bind the company. Also, include language affirming that the member’s liability is limited pursuant to applicable law. Finally, include boilerplate language for administrative matters as detailed below. If you have a multi-member managed LLC, the management section of the operating agreement should include terms detailing member duties, dispute resolution between members and accommodation of members who wish to sell or otherwise transfer their interest in the company. If you choose a member-managed structure and have multiple members include these terms before the management terms below: Management of the business: State that management of the business is invested in the members. Also, explain that the members will appoint one chief executive member who will have the most responsibility and be head of operations for the business. Members: Limit the liability of the members and specify that members may take part in the control, management, direction or operation of the company’s affairs and have powers to bind the company through contracts and other obligations. Duties of members: This section does not detail each member’s duties. Instead, it should state that each member should have duties and describe what will happen if a member doesn’t meet those duties. Chief executive member: A chief executive member is the member who has primary responsibility for managing the operations of your company and for making member decisions happen. This section is not necessary if you have a single-member LLC. Manager-managed LLC In a manager-managed LLC, only managers and designated officers have the authority to bind the LLC. A manager can be a group of members with management authority or a third-party hired to manage the company. Choose this if you’d like to limit management authority to a group of your members or if your business will benefit from a non-member manager. Generally, the manager-managed structure is best for larger companies, and member-management is better suited to single-member LLCs. However, it may be appropriate to consider a manager-managed single-member LLC if you own a retail business or other company that will necessitate hiring individual store managers. Consider the needs of your business and determine the appropriate management structure accordingly. If you opt for a manager-managed structure, the management portion of your operating agreement won’t depend on how many owners you have. Instead, the operating agreement should include a section specifically outlining the duties of the manager. If you choose a manager-managed structure include these terms before the management sections below: Management of the business: State here that the LLC is manager-managed and indicate that the managers are named in the Articles of Organization you filed with the secretary of state when you created your LLC. Also, include how managers will be appointed. For example, you can decide that members holding a majority of the capital interests in the LLC may elect managers. Members: This section should state that members shall not take part in the operation of your company’s affairs unless they are elected managers. Choosing a management structure is one of the most important parts of setting up your business. Your management structure will also determine the content of your LLC operating agreement, so it’s important to select the correct structure. nationwide team of On Call attorneys can help you choose a management structure and draft an operating agreement for your LLC. Additional Management Sections Regardless of your management structure, there is specific boilerplate language you should include in Article IV to protect your LLC and its members from third-party legal action, bankruptcy or regulatory action. If you have a multi-member LLC, include language regarding indemnification, recordkeeping requirements and how members can access company records in Article IV of your operating agreement. Additional sections to include in your operating agreement include: Disputes of members: This section should state that disputes among members will be decided by a majority vote. Include this only if you have a multi-member LLC. Powers: This section describes the powers of an LLC’s member-managers or manager-managers. Include details about whether members/managers can enter into contracts, buy property, take out loans or otherwise bind the company. Include this only if you have a multi-member LLC. Nominee: A nominee is a third-party public representative for an LLC that allows an LLC to own property without it becoming public knowledge. This section states that title to the company’s assets should be held in the LLC’s name or in the name of a nominee like an attorney or title company. Company information: An LLC’s members should have access to all books, records and materials regarding the LLC’s activities that are in a member or manager’s possession. Include this section to describe the rights of members to access, inspect and copy these records in Article IV of your operating agreement. Exculpation: An exculpation clause relieves an LLC’s members or managers from liability to the members for damage caused by actions taken in good faith and to promote the best interests of the company. Indemnification: This section states that the LLC will compensate members or third parties acting on behalf of the company for harm, liability or losses stemming from their good faith actions with respect to the company. Records: Retain copies of your member names, certificate of formation, operating agreement and financial records. Reference IRS regulations or consult a CPA or tax attorney to determine how long to keep records and include the time period in Article IV. Determining the appropriate management structure for your LLC can be a difficult decision. We recommend hiring an attorney to help you organize your company. If you don’t want to spend money on hourly legal fees, sign up for membership program for $39.99 per month and their network of On Call attorneys can guide you through the process. 7. Article V: Identify Your Officers Your LLC isn’t required to have officers. However, you can provide structure to your LLC by creating titles and detailing relevant scopes of work. If your LLC has members or employees who’ll take a leadership role in the company, use Article V of your operating agreement to identify what they’ll do and how they’ll be selected. Include officer language in your LLC operating agreement if you may want officers including: President: The president of your LLC must be a manager of the company and will be responsible for guiding the high-level operations of the LLC. Chief financial officer: Your LLC’s chief financial officer will keep and maintain books and records of accounts of the properties and business transactions of the LLC, including accounts of its assets, liabilities, receipts, disbursements, gains and losses. Vice president: A vice president can be an owner, manager, or employee responsible for the operations of a specific department within your company like sales or finance. Secretary: An LLC secretary is charged with preparing and filing annual reports, taking meeting minutes and other record-keeping responsibilities. In addition to describing each of the roles, include sections in Article V about general duties, how officers will be appointed, the extent of their decision-making authority, how they’ll be compensated, and how the LLC will fill open officer positions. You should also create an exhibit to the operating agreement that lists the names and roles of each officer at the time the agreement is executed. 8. Article VI: Define Compensation Structure An LLC’s compensation structure determines what managers will be paid and how members can draw against their ownership interest. Use Article VI of your operating agreement to restrict when a member may take draws and how managers will be compensated for services. You don’t have to restrict member draws but always provide information regarding manager compensation. Management Fee LLC managers are typically reimbursed for out-of-pocket expenses related to LLC management and compensated for time spent performing LLC management responsibilities. If you would like to control how your LLC’s managers are compensated, include language in Article VI of your operating agreement that limits payment to reimbursement and compensation commensurate with the value of management services. Member Compensation Instead of being compensated for their work in the company, LLC members have a capital account. However, in addition to receiving distributions, they can opt to receive a “draw” of funds from their capital account. Include language in your operating agreement to specify when and how draws may be made. 9. Article VII: Describe Bookkeeping Practices Your LLC should maintain detailed financial records to meet state and federal tax requirements. If you’re a multi-member LLC, you’ll also need to keep records of capital contributions and member accounts. Choose a fiscal year and use Article VII of your operating agreement to detail how to prepare and maintain your books and track member accounts. Keep the Company’s Books An LLC’s books are used to track the company’s day-to-day affairs and prepare balance sheets and other financial statements. Keep complete records in your company’s ledger to track income expenses, loans and other debt. Include general language in your operating agreement to require that members or managers maintain complete and accurate books. Track Member Accounts You should also keep a record of members’ capital account and distributions. Bookkeeping requirements for member accounts are dictated by federal regulations, so reference these to ensure you’re including the necessary details in your operating agreement. Incorporating these terms will help your LLC comply with tax requirements and prepare you if the LLC is sold. Prepare Annual Reports After the close of each fiscal year, your LLC must also prepare statements of each member’s share of profits and losses and provide them for their individual tax returns. Include a section describing these requirements in your operating agreement to ensure your members and/or managers are aware of the reporting requirements. Define Your Fiscal Year Unlike a calendar year, an LLC’s fiscal year is 12 consecutive months ending on the last day of any month. This date determines when your year ends for accounting purposes. Choose a fiscal year that works for you, but you must continue this timeline every year, and it can be difficult to change. 10. Article VIII: Establish Transfer Procedures Article VIII of your operating agreement should include procedures for transfer of shares in case of a member buyout or the company’s dissolution. Buyouts involve members selling their ownership shares, whereas dissolution occurs when an LLC goes out of business. Control how membership shares are treated in these situations by describing procedures in your agreement. Use Article VIII of your operating agreement to describe how shares will be assigned from an exiting member, how an exiting member’s interest will be valued for the purpose of a transfer and how the member’s interest will be distributed and reimbursed. Much of this language is boilerplate, but it’s important to describe how long members will have to purchase an exiting member’s interest and what happens to a former member’s debts upon dissolution of the company. 11. Execute Document and Meet Filing Requirements To make an operating agreement a binding contract between members and/or managers, it must be signed by every member of your LLC. Once signed, provide copies to each member and manager and keep the original on file at your principal place of business. Always check with your secretary of state regarding specific filing or recordkeeping requirements. Drafting and executing an LLC operating agreement can be an extremely nuanced process, and it’s important to make sure the document is properly executed. In addition to helping you draft an agreement for your company, On Call network of attorneys can help make sure your LLC documents are enforceable legally. How an LLC Operating Agreement Works An operating agreement is a legal contract among members and between members and managers of an LLC. Operating agreements provide stability to LLCs by formalizing ownership shares, profit-sharing, voting rights and other parts of the business. Once signed by all of the LLC’s members, it becomes a legally binding contract defining how the company should operate. Defining important terms of your company’s operating will help your LLC survive if disputes arise or a member chooses to leave the company. An LLC operating agreement also enables companies to avoid the default rules states impose on companies that don’t have an agreement on file. Include all of the relevant information in your operating agreement so you can find it easily if a problem arises. Who It’s Right For In the absence of state requirements, operating agreements are best for multi-member LLCs or LLCs with employees. However, your LLC will be subject to default state laws if you don’t have an operating agreement on file, so we recommend that every LLC have one in place. It’s best to hire an attorney to assist with important legal documents, but you can save money by using our templates to draft a simple LLC operating agreement for your company. States don’t require LLCs to file operating agreements with the state formally, but some require LLCs to keep one on file. Even if your state doesn’t require an agreement, the document is a great way for any LLC to formalize operations. Check with your secretary of state to determine if you’re required to have an operating agreement. “Issues with third parties are part of business — business conflicts happen and you deal with them. What tears a business apart is when it implodes from the middle. If members are fighting over profit sharing arrangements or other major decisions, an operating agreement can protect you from another member destroying your business.” — Brett Trembly, Esq., Trembly Law Firm Pros & Cons of Using an Operating Agreement There are pros and cons to having an operating agreement for your LLC. Because you aren’t required to file an agreement in every state, decide whether drafting one is worth the added costs. If you have the time and resources, execute an operating agreement to formalize important elements of your business and avoid state-specific default rules. Pros of Using an Operating Agreement The pros of using an operating agreement include: Minimize management disputes: Where an LLC has more than one member or Manager, it’s important to detail voting rights early on. This can be accomplished by including voting rights and the scope of manager authority in an operating agreement. Avoid default state laws: Every state has default laws to control how LLCs operate in the absence of an operating agreement. File an operating agreement to avoid these default laws and the uncertainty that comes with them. Quickly resolve disputes: Operating agreements are a great way to establish your preferred methods of dispute resolution. Decide how you want to resolve intercompany disputes and include the terms in the agreement. Prepare for possible dissolution: If a member dies or decides to leave the LLC, you’ll have to reallocate ownership percentages. Detail how this will be done in your operating agreement to prevent an unwanted dissolution of the LLC. Cons of Using an Operating Agreement The cons of using an operating agreement include: Expensive to draft: Using an attorney to draft an operating agreement can be expensive. Avoid these added costs and provide structure to your company by using one of our free LLC operating agreement templates. Time-consuming: Drafting an operating agreement requires you to consider how you want certain business decisions to be made before issues arise. This can take time and energy you may not have when first forming your LLC. Restrictive: Depending on the terms you include in your LLC’s operating agreement, you may find that complying with things like meeting requirements restricts your ability to operate efficiently. LLC Operating Agreement Examples The format and content of an LLC operating agreement change depending on the LLC structure and state of organization. In addition to checking with your state’s requirements, follow a standard format to ensure your agreement is comprehensive and understandable. Use our simple LLC operating agreement templates to create an agreement that meets your LLC’s needs. Sample LLC Operating Agreement for Single-member LLC Single-member LLC operating agreements serve to separate the member from the LLC for liability purposes and supersede state default rules. They are also an excellent way to establish the duties and compensation of a third-party manager. Select this template for your single-member LLC and choose the language appropriate for your management structure. Check out our simple single-member LLC operating agreement below: Sample LLC Operating Agreement for Multi-member LLC An operating agreement for a multi-member LLC includes many of the same terms as a single-member operating agreement, like primary place of business and registered agent. However, this template is more detailed than the single-member template because it’s aimed at making interactions between members more predictable. Check out our multi-member LLC operating agreement below: Frequently Asked Questions What Is an LLC Operating Agreement? An LLC operating agreement is a legal contract among the members and between the members and managers, of an LLC. It defines the scope of the LLC and dictates how the company will be operated. An LLC operating agreement commonly includes details like how to share profits, voting rights and how the company may be dissolved. Do You Have to Have an Operating Agreement for an LLC? No state requires an LLC to file an operating agreement with the secretary of state. However, some require LLCs to keep an agreement on-file. Additionally, states have default rules for LLCs that apply in the absence of an agreement. Execute an operating agreement to provide structure to your company and avoid the uncertainty of default rules. Do You Need an Operating Agreement With a Single Owner LLC? Operating agreements are most helpful for LLCs with multiple members or employees. However, single-member LLCs should also have an operating agreement to differentiate the owner from the business for tax purposes and to avoid state default rules. Check out our LLC operating agreement templates to draft one for your small business today. What’s the Difference Between an Operating Agreement and Articles of Organization? Your LLC’s articles of organization is the document filed with the secretary of state to create your LLC. The contents of this document vary by state but generally include the LLC’s name, business purpose and owners. In contrast, an operating agreement is drafted after your LLC is formed and details your company’s organization and management. The Bottom Line LLC operating agreements aren’t required everywhere but are an excellent way to formalize your LLC’s structure and avoid the uncertainty of state-specific default rules. The content of your operating agreement will differ depending on your LLC’s ownership and management structure. Determine your company’s needs and choose a simple LLC operating agreement template that works for you. LLC operating agreements are nuanced, state-specific documents, so we recommend hiring an attorney to draft one for your company. However, attorneys can be expensive, and some companies like single-member LLCs require less complicated operating agreements. If you don’t want to spend money on an attorney, check out for help with your LLC operating agreement.

You can find and lease office space for rent by identifying spaces through online listings or brokers that meet your business’ current needs, budget, and potential for growth. Brokers are either listing brokers or tenant-brokers, which can help identify properties, schedule walk-throughs, and negotiate leases. Use a broker as well as do your own research. One thing that can make or break an office space is access to reliable internet, phone, and network services. Business Services Connect is a telecommunications cooperative that offers an instant-locator tool to help you find communication providers for your location. You can compare plans from major providers servicing your area, including Spectrum, Atlantic, and Comcast, to find the right fit for your needs. 1. Evaluate Your Office Needs When choosing an office for your business, the first step is to define the needs of your business and your employees. Decide how much space you need, estimate your overall budget, and determine what class of office space is required. Also, determine your parking requirements, office layout, and potential company growth before searching for and touring potential office spaces. You can evaluate your office needs in the following way: Determine How Much Space You Need Your spatial needs depend on the number of employees you have, what kind of workspace your employees need, whether you need conference rooms, and other factors. Typically, assume that each employee will need 75 to 150 total square feet, with management-level employees needing 150 to 400 square feet, which accounts for dedicated work and office space per employee. In addition to the amount of workspace you need, evaluate whether you’ll need conference rooms, a waiting area, or other client-oriented spaces. Finally, add in space for office services like a copy room, break room, kitchen, or file and mailrooms. In general, estimate the square feet per employee (above), multiply by the total number of existing employees, and add 30 percent to account for common areas, etc. Then, to account for future growth, add 10 percent to 20 percent or another number more consistent with your business model. Evaluate Employee & Client Needs In addition to understanding how much space your employees need to perform their jobs, consider what else your employees and clients need from your office space. Depending on the type of business you have, you may benefit from a specific interior layout, access for employees and clients with special needs, and parking availability. Things to consider when evaluating employee and client needs include: Interior layout - The ideal layout of your office building depends on the type of workspaces your employees need, the amount of meeting space and client service areas you need, and whether you need a kitchen, mailroom, etc. Parking availability - Your parking needs will differ based on the number of employees your business has and how many clients regularly visit your office. For example, a tech company may need an open, more collaborative work environment, whereas a doctor’s office would prefer more divided workspaces with individual, private rooms. Determine Your Location Needs Your new office space should also be located in a place that is convenient for employees, clients, and suppliers. Consider how easily accessible each potential office is by major roads and public transportation. Before signing a lease, make sure the new office is close to your target clientele and any businesses you work with or rely on as part of your day-to-day operations. Proximity to target clients - If you have a business where clients frequently visit your office, your office should be located close to your core clientele. Accessibility - Your office’s proximity to major highways and public transportation will determine how accessible it is to employees and clients. For example, a law firm may want office space within walking distance of the courthouse, whereas a restaurant could benefit from proximity to food suppliers and preferred patrons. Choose a Class of Office Building An office’s class generally describes the quality of its structure and amenities, and is determined in relation to other building classes. There are three main classes of office buildings—Class A, Class B, and Class C—each with varying age, amenities, and quality of tenants. Once you evaluate your needs based on your specific business operations and employee and client needs, determine which class of space is ideal for your business. The three classes of office buildings are: Class A - Class A office buildings are the highest-quality spaces on the market. These spaces are generally the newest buildings, are well-managed, and have high-profile tenants. They’re often best for legal, marketing, design, and financial firms that need offices to impress clients. Class B - Some Class B buildings are older Class A buildings, but still have the potential to be restored to a Class A-quality space. Other Class B structures, known as purpose-made Class B buildings, were purposefully constructed to provide functional office space for a cheaper price than Class A space. Choose this type of building if you want a nice space but don’t need the best of the best. Class C - Class C office buildings are generally the least desirable because they are older, located in less popular neighborhoods, and require extensive renovation or maintenance. These buildings are typically 10- to 15-year-old Class A buildings or 5-year-old Class B buildings, and are perfect if you just need a cheap space to operate your business. Address Time Constraints When choosing an office, consider how quickly you’ll need to move into your new space. Whether you have a startup or an established business, it’s important to maintain continuity in business services, even during a move. If you need to move into your office within a specific time period, identify spaces that can be leased within your time constraints. Your preferred lease period can also affect your options. Commercial leases typically range from three to ten years, but some buildings may only be available for minimum leasing periods. A short lease is more flexible because it shortens the time you’re obligated to remain in the same space. In contrast, you can lock in a lower price for longer with a long-term lease, but committing to one space for several years can limit growth or cause financial hardships. 2. Estimate Your Budget Estimate a budget for your office based on average local rental costs, your needs for space and services, and financial constraints. Determine your ideal budget by multiplying the average local price per square foot by the space your business needs, found in step one. Then, add in maintenance and utility costs and review your financial records to estimate a realistic budget. Steps for estimating your rental budget include: Determine Average Price per Square Foot The price per square foot for office space depends largely on geographic location. For example, in Atlanta and Dallas, office spaces cost $1.74 and $1.92 per square foot per month, respectively. However, in San Francisco and New York City, office space costs an average of $5.43 and $6.16 per square foot, respectively. Calculate the monthly cost for your desired office by identifying the average cost per square foot in your area, taking into account the class of building you want as well as its location, and multiplying it by your ideal amount of space based on an evaluation of your business’ needs. Add Common Area Maintenance Fees Common area maintenance fees are what you pay to maintain common areas of your office building like the lobby, elevators, and hallways. CAM fees are typically calculated based on square footage and range from 15 percent to 35 percent of the total lease amount, depending on factors like the age of the building and insurance rates. Research typical CAM fees in your market and build that number into your overall budget. Include Utilities On average, electricity for an office building costs $1.34 per square foot per month. Unlike some residential rentals that include utilities in the monthly cost, commercial office building leases do not generally include the cost of utilities. Once you decide how much space you’ll need, use average utility costs to calculate an estimated utility budget that fits your needs. For example, if your price per square foot is $2.00 per month, your desired square footage is 1,500, and you estimate paying $1.75 per square foot per month in CAM and utilities, your monthly lease budget should be forecasted at $5,625. 3. Identify Office Space for Rent That Meets Your Criteria Once you identify your needs and estimate a budget, hire a tenant-broker to identify properties within your ideal parameters. A broker will provide local knowledge, assist during lease negotiations, and save you time. However, a broker isn’t required, and if you want to do it yourself or do some preliminary searching, try LoopNet’s online search tool. Work with a Tenant-Broker There are two types of commercial real estate brokers: listing agents, who work for the landlords, and tenant-brokers, who represent tenant interests. Listing agents always have a duty to act in the landlord’s best interest, but the tenant-broker doesn’t always owe the same duty to the tenant. Listing agents earn a commission between three percent and six percent of the total lease (paid by the landlord) and tenant brokers typically earn a percentage of that commission. Real estate brokers aren’t required, but have invaluable expertise, knowledge, and connections that would take the average business owner years to gather. Websites like Regus and LoopNet provide helpful resources, but can’t replace the expertise of a real estate professional. In addition to providing insider knowledge, real estate brokers can save you time, help you with the lease negotiation process, and more. Commercial brokers can help you with specific things like: Local knowledge - A local broker will have an in-depth knowledge of your area and may even have previous experience working with potential landlords. Pocket listings - Many local real estate agents are aware of properties that haven’t yet been listed or that may become available in the future. These so-called “pocket listings” are a great way to discover in-demand properties before they’re officially available. Negotiations - As in any contract negotiation, it’s best to have a professional on your side. Having a leasing agent will help you understand the terms of your lease and avoid common pitfalls like limiting your right to sublease the space. Saving time - Identifying, researching, and touring offices is an extremely time-consuming process. A broker can reduce the time you spend looking for an office and allow you to dedicate it to building your business. Remember that because a tenant-broker isn’t legally obligated to act in your best interests, make sure you ask questions when hiring a broker that address their experience, size of practice, compensation structure, and knowledge of the market. Find a broker with local real estate knowledge using an online platform like The Broker List, where you can search by name, company, or zip code. Alternatively, reach out to your network to see if anyone has had experience with local brokers. Do the Legwork Yourself In addition to hiring a real estate broker or leasing agent to assist with your search for office space, use a website like LoopNet or CoStar to identify properties that are available in your area. On LoopNet, simply select the “For Lease” option, choose the type of space you need from the dropdown menu, and enter your geographic area. You can then sort spaces by price and size, view walkability and transit scores, and more. Using an online resource is a great way to familiarize yourself with the local real estate market before working with a real estate agent. Websites like LoopNet can also help you point a commercial broker in the right direction so you don’t waste time looking at buildings that don’t meet your needs. We recommend using a local broker to help find an office space for your business. However, you can choose to go it alone. Just keep in mind that you’ll have to handle several stages of the leasing process without the guidance and local knowledge of a real estate professional. Without a broker, you’ll have to handle each step of the leasing process on your own: Identifying available office spaces Scheduling and attending walk-throughs and inspections Negotiating a lease 4. Research & Tour Available Office Space for Rent Narrow your options down to the most promising office spaces that meet your criteria, collect background information, and contact the listing agent to schedule tours. Research security features, the age of building mechanicals, and utilities before each tour to familiarize yourself with the property. When you visit, observe surrounding neighborhoods, parking availability, and other features important to employees and clients. If you’re working with a commercial broker, he or she will provide background information on each property and work with listing agents to schedule walk-throughs. Your broker will then attend each walk-through with you and make sure all of your questions and concerns are addressed. If you choose to lease an office without the help of a broker, you will need to contact the listing agents to schedule visits and attend walk-throughs on your own. Things to consider when evaluating potential office spaces include: Surrounding Area The area surrounding your office is important for your employees and clients who visit for meetings. When you tour an office building, make sure the neighborhood suits your business as much as the office space itself. Plus, if you’re interested in the walkability of an area, a tour of the building and surrounding area is the best way to evaluate whether there are footpaths, sidewalks or other conditions that will help pedestrians find your business. Ease of Access Again, office building accessibility is a valuable consideration for your employees and your clients. If you typically limit your work to one or two specific communities, make sure the office is convenient for them. Regardless of the type of business you have, make sure your new office space is handicap accessible as required by the Americans with Disabilities Act. Security Features The importance of security features depends on your business and the location of your office. If you’re willing to house your business in a less desirable area to save money or to be closer to potential clients, make sure the building has adequate outdoor lighting, gates, surveillance cameras, or other appropriate security features. Security is especially important if your employees will be working at night or if your business keeps a large amount of cash or valuable inventory on-site. Age of Building Mechanicals A building’s mechanicals include plumbing, elevators, escalators, and heating and air-conditioning systems. You may not be responsible for repairing or maintaining mechanicals under the terms of your lease, but you don’t want to lease an office building where the air conditioning or plumbing is always on the fritz. Ask the leasing agent when the mechanicals were last updated to make sure you won’t face issues with the building. Office Amenities An office building’s amenities are additional in-house services that are available to tenants of the space. Some larger office buildings have cafes, dry cleaning services, gyms, and day care services. If these services are important to you, have the leasing agent show you what’s available when you tour the building and find out if there is an additional cost associated with the various amenities. Other Tenants Pay close attention to the type of tenants in each building you visit. If a tenant brings in clientele that aren’t consistent with your professional brand, consider a building better suited to your practice. It’s also important to consider who the anchor tenants of the building are. If an anchor tenant goes out of business, the space may become less appealing than anticipated. Parking Availability If the office building does not have a dedicated parking lot, find out how many parking spaces you’ll be entitled to if you lease the office. Depending on the number of employees in your company and how often clients will visit the office, some buildings may not offer the parking spaces you need to succeed. 5. Organize Your Business’ Financials The financial strength of your small business impacts the kind of office space you can lease. Two to three years of profit and loss statements, up-to-date credit reports, and references demonstrate to potential landlords that you’re a reliable source of rent. Prepare financial records before you negotiate a lease so you’re ready to move forward when you find an office that fits your needs. Steps for organizing your business’ financials before leasing an office include: Compile Financial Documents Before beginning your search for the ideal office, organize your business’ financial documents, including balance sheets, tax returns, profit and loss statements, and bank records. We recommend obtaining documents going back two to three years, but that may not be possible if you have a startup. Regardless of the age of your business, organize financial records to demonstrate your current and long-term ability to meet the financial obligations of a lease. Assess Your Credit Score Your personal and potentially your business credit are among the first things a potential landlord will look at when considering your offer to lease an office. It’s best to have a comprehensive understanding of your creditworthiness, but that can require a hard inquiry, which can negatively impact your score. If you don’t want a hard inquiry into your credit score, use a service like Nav to research your score and provide it to potential landlords when making an offer. They provide a free personal credit score as well as a business credit report summary. Contact References Building owners often require references from a potential tenant’s prior landlords. Reference letters let a landlord learn more about your business’ rental history and informs the decision of whether to let you rent office space from them. Obtain letters of reference from your previous landlords early in the leasing process so you’re prepared as soon as you find a new building. Sign a Personal Guarantee A personal guarantee is a statement that the owners of your business will comply with the terms of the lease, even if you vacate in the middle of that lease. Some landlords will require a personal guarantee as part of the leasing process. Prepare to sign a personal guarantee by assessing your personal finances to demonstrate to a landlord that you’re personally capable of covering the rent if your business is unable to do so. 6. Choose an Office & Negotiate Your Lease Once you identify an office that meets your needs and budget, negotiate a lease. If you hired a broker, he’ll negotiate the terms and ensure you get the best deal possible. However, if you chose not to use a broker to reduce commissions, watch out for terms regarding rent escalation and subletting before signing your lease. There are three types of leases for commercial office space: Full service lease - Under a full service lease, the landlord is responsible for paying the expenses associated with the property, including property taxes and insurance, repairs and maintenance, and utilities and janitorial services. This is the most common commercial lease and the best type of lease for the tenant. Net lease - A net lease is a lease agreement where the landlord charges a lower annual rent as compared to a full service lease, but can include monthly “usual costs” such as property taxes, property insurance, and common area maintenance (CAM) fees. Modified gross lease - Under a modified gross lease, a tenant pays for their portion of property taxes, property insurance, and CAM fees as a lump sum along with their rent. This means that the rent on a modified gross lease is fixed and there are no hidden costs or unexpected charges. Check out our guide to leasing commercial real estate for more information on the types of leases you’ll encounter when finding a new space for your company. Things to Consider When Negotiating Your Lease Most commercial leases contain terms regarding base rent, lease term, rent escalation, and tenant improvements. Make sure you understand the maximum amount of rent you’ll have to pay each year, how long you’re entitled to use the space, and what your landlord will be responsible for under the lease. Familiarize yourself with these important considerations before signing a lease. Factors to consider when negotiating your lease include: Base Rent Base rent is the amount of rent you will have to pay each month for usable space and will be presented as a cost per square foot per year. This value may include usable space, which is the space your office actually uses for operations, and rentable square feet, which includes your business’ share of common space within the building. When negotiating your office lease, consider the rentable square feet before agreeing to a base rent. Length of the Lease Term Commercial leases typically range from three to ten years. Make sure your lease doesn’t require you to stay for longer than you are willing. Conversely, if you prefer a longer lease period, confirm that the space is yours for as long as necessary to meet your needs. Tenant Improvement Credits If an office requires renovations before you can successfully operate your business, make sure the lease contains tenant improvement credits to cover related expenses. These credits give a tenant the ability to make necessary leasehold improvements at the expense of the landlord. Rent and Rent Escalations Beyond listing the monthly and annual rent, your office lease will also describe any future rent escalations. By including such a term in the lease, a landlord can legally increase the rent during the lease. Rent escalations of three percent per year are fairly common, so make sure your lease doesn’t contain an abnormally high percentage. Things to Avoid When Negotiating a Lease In addition to ensuring the lease meets your business’ needs, there are several boilerplate lease provisions you should avoid when you’re renting office space for small business. Lease terms can give the landlord the right to terminate your lease at any time without cause, the ability to pass along building maintenance costs, and more. Watch out for red flags like these when negotiating your office lease. Red flags to watch out for when negotiating your office space lease include: Use Clause A use clause describes the type of business that may operate within a specific commercial space. For example, a lease may limit the use of a space or building to retail or office. Before signing your lease, make sure that the use of the building is not restricted in a way that will limit your ability to operate your business. A use clause can also interfere with your ability to assign the lease to another business, so negotiate as broad a use clause as possible. Termination Without Cause Sometimes landlords reserve the right to terminate your lease without cause to maintain flexibility in their operations. This can be extremely detrimental to your business if your landlord chooses to exercise the right and forces you to leave before your lease is complete. Transfer Limitations As with residential leases, a lease must be assignable for a tenant to sublease or otherwise transfer the office during the lease period. If you think you might leave the space before your lease ends or if you might sell your business with the lease in place, make sure the lease allows for assignment and subletting. Increased Property Taxes In a commercial lease, the landlord typically pays property taxes for the space. However, if you lease an office, you may be responsible for paying any increases in property taxes from when the lease was first signed. If you’re not comfortable with this potential increase, review your lease for language stating you’ll be responsible for paying any increases in property taxes during the lease period. As-Is Clauses An as-is clause is a section of a lease that attempts to relieve a landlord of his duty to repair or improve the leased space. This section includes language stating that the tenant will accept and occupy the building in AS IS condition—as the building existed on the date of the lease—and that the landlord is not obligated to improve or repair the premises. Though this language gives you the right to inspect the property prior to signing the lease, you should reject this language if possible. Mistakes to Avoid When Renting Office Space Choosing an office space is a major business decision that is fraught with challenges. Businesses often lease a new office space only to find that it is too expensive, too small, or otherwise inconsistent with their needs. When identifying your company’s ideal office space, watch out for the common mistakes businesses make when selecting an office. Mistakes to avoid when renting office space for small business include: Spending Too Much A major mistake when leasing an office is committing to a high monthly payment and overextending your business. If you lease an office that doesn’t fit conservatively within your business’ budget for overhead, you risk harming the company’s long-term success or going out of business. Identify and commit to a conservative budget before you start looking for offices and don’t get caught up in fancy amenities you can’t afford. Going Too Small When choosing an office, it’s important to consider the long-term needs of your business. It’s impossible to know where your business will be in one, three, or five years, but you should carefully consider your company’s goals as you search for an office. Then, each time you tour a space, evaluate how you would fit in the space if your company’s growth mirrored or even outpaced those goals. Choosing the Wrong Location Location can make or break a business, so familiarize yourself with surrounding neighborhoods and transportation options before signing an office lease. If you have an existing customer base, focus on their preferences but don’t ignore the geographic needs of your target market as a whole. Spend time researching surrounding businesses, local services, and more before choosing an office location. Missing Important Lease Terms A lease is a legally binding contract between a landlord and the business leasing office space. Many lease terms are extremely landlord-friendly and, if ignored, can have major financial consequences for a small business. Watch out for use clauses, transfer limitations, as-is clauses, and other lease sections that can cost your business money and limit flexibility. Pros & Cons of Renting Office Space for Small Business Depending on your needs, there are several pros and cons to renting office space for small business. Leasing an office can be cheaper than purchasing, but doesn’t build equity in real estate and can leave you susceptible to your landlord’s actions. Familiarize yourself with the pros and cons of leasing before signing on the dotted line. Pros of Renting Office Space for Small Business The pros of renting office space for small business include: Less expensive than buying - Leasing office space can help your small business cut back on overhead expenses over purchasing a building. Your lease payment may be less than a mortgage payment and you won’t have to worry about other expenses like taxes and insurance. Lower maintenance - When you lease your office space instead of buying, you’re not responsible for the maintenance of the building. This will save you the time, money, and energy associated with maintaining your own building. More options - Depending on your market, you may have more options for renting office space for small business than buying. If you’re in a seller’s market, consider renting office space until the real estate market swings in your favor. Cons of Renting Office Space for Small Business The cons of renting office space for small business include: Less flexible - When you sign a lease, you’re committing to the same office space for the entire lease term. This reduces your ability to change the location to meet the evolving needs of your company. Still expensive - Depending on your market and your business’ needs, leasing an office may still be outside your budget. No equity in the property - Though lease rates can be less expensive than purchasing an office, the money you pay each month is not a long-term investment. If you want equity in your office, consider using a shared workspace through WeWork until you can afford to purchase an office. Unstable - As a renter, you’re often subject to the whims of your landlord—the building’s owner. Depending on the terms of your lease, your landlord may sell your office building to someone else or otherwise modify the property during your lease period. If you’re trying to decide whether to rent or buy an office, check out our guide to buying vs. leasing commercial real estate for the benefits and drawbacks of each. Bottom Line - Office Space for Rent Before renting an office, you should understand your company’s needs, budget, and plans for growth. We recommend hiring a licensed commercial broker to identify properties, schedule walk-throughs, and negotiate a fair lease. However, you can research offices yourself using a service like LoopNet. Follow our six steps to guide you through the leasing process. Don’t forget to check that the office space you’re looking at has access to reliable internet and networking services. Business Services Connect is a telecommunication cooperative with an instant-locator tool that makes it easy to find the right local internet, phone, and networking providers for your space.

A business partnership agreement is a contract between partners that contains terms like the business’s purpose, partner contributions and voting rights. A partnership agreement isn’t required to form a general partnership and doesn’t have to be filed with your state. However, have your partners sign one to create a legally enforceable document for resolving disputes. offers a state-specific business partnership agreement template, asks you 10 to 15 questions, and then drafts an agreement for you. . for a free customizable legal agreement from Rocket Lawyer. Business Partnership Agreement Templates Free General Partnership Agreement Template We recommend hiring an attorney or online legal service, such as , to prepare important legal documents for your partnership. However, if you’re comfortable drafting your own agreement and want to save on legal fees, download our free general partnership agreement template and follow the steps below to draft a simple partnership agreement for your business. Get your free business partnership agreement template here: Free General Partnership Agreement Template (Google doc) Free General Partnership Agreement Template (.docx) Free General Partnership Agreement Template (PDF) State-specific Business Partnership Agreement Template The 11 steps to draft a business partnership agreement include: Articles I-V: Organize Basic Partnership Details Provide basic details about your business at the beginning of your partnership agreement. Articles I through V of your partnership agreement should include your partnership’s name, location, purpose and term. General partnerships don’t have to file this information with the state but include it in a signed partnership agreement to keep on file with your business. As a lead-in to Articles I through V, provide the names and addresses of your partners in the first paragraph of your partnership agreement. This information lets the public know that you and your partners are all engaged in business activities together as you fill out the articles together. Follow these steps to draft Articles I through V of your partnership agreement: Identify Your Partnership State Your partnership state is the state in which you’ll conduct business. The state you select determines the availability of a fictitious name for your partnership and determines the taxes and laws that will apply to your business. This information will be included in the title of your partnership agreement, in Article I and in various places throughout your agreement. Name Your Partnership A partnership can be named after its partners or operate under a fictitious business name. If you choose a fictitious name, confirm it isn’t already in use and fill out a fictitious business name statement to give notice that your partners are operating under the name. Once finalized, include the name in Article II of your partnership agreement. If you wish to operate under the name of your partners, list each partner’s last name. However, if you want to operate under a fictitious business name, choose one that describes your business without limiting your geographic area or products. For example, instead of “Northwest Ohio Fishing Lures,” choose a name like “Midwest Outdoor & Fishing.” If you need some help choosing a business name, check out our business name generator. Identify a Broad Purpose States don’t require general partnerships to have a partnership agreement, so your purpose statement doesn’t have to meet any state-specific requirements. However, it should describe the nature of your business and be broad enough to allow for future business growth. Include a general purpose statement in Article III that allows your partnership to evolve without revising the agreement every time your business changes. For example, stating that the purpose of the partnership is to own and develop real property and do all other lawful things as may be necessary to carry on the partnership is general enough to encompass a variety of real estate services and allows for growth. Similarly, if your purpose is conducting the general business of operating a commercial farm and “such other businesses and purposes as the partners may from time to time determine,” you leave your partnership room to evolve. Define Your Partnership Term The partnership term is the amount of time the partnership relationship will exist. This period begins when the partnership is formed and can end at any time. Include a starting date and describe when the partnership may end in Article IV of your business partnership agreement. For example, if the partnership was created to handle a single task or project, provide a specific termination date for the partnership. Otherwise, state generally that the partnership will exist until the partners mutually agree to dissolve it, until the death of a partner or until any other circumstance agreed upon by the partners. Locate Your Principal Place of Business Your principal place of business is the address where you’ll perform the partnership’s business activities. This should be a street address and not a P.O. Box. Use Article V to set forth your place of business at the time the agreement is executed but allow partners to change the address as necessary during the partnership. For example, if you have a retail store, your principal place of business will be the address of the brick-and-mortar store. In contrast, if you have an e-commerce website, your principal place of business is the address from which your partners and employees are running the website. Our template is a great place to start if your partnership is already formed or if this isn’t your first business. However, if you need extra guidance while you set up your business, let help you compile the necessary information to get your partnership up and running. A Rocket Lawyer membership plan is $39.99 per month and its On Call attorneys can guide you through the process of creating your partnership. 2. Article VI: List & Describe Each Partner’s Contribution A partner’s capital contributions are cash investments, physical property, and other assets like intellectual property they commit to business operations at the outset of the partnership. Capital contributions establish each partner’s equity in the business. List and describe partner contributions in Article VI of the partnership agreement to establish a record of each partner’s capital account. Capital contributions of partners can include: Cash: This is the most common type of contribution to partnerships and many of your partners will likely contribute cash as their initial capital contribution; denote this value in Article VI of the partnership agreement and specify whether it is earmarked for specific partnership expenses Personal property: Personal property contributions include things like equipment or furniture; for example, if you start a restaurant one of your partners may contribute kitchen equipment or furniture for the seating area. Include the value of this property in your partnership agreement Real estate: If your partnership will have a brick-and-mortar office or storefront, one of your partners may contribute real estate; include the appraised value, address and other identifying information for this property in the partnership agreement Client lists: In addition to industry knowledge, some partners also use their client lists as a capital contribution; it can be difficult to assign a monetary value to this kind of property so don’t undervalue this contribution when assigning ownership interests; you may encounter this kind of contribution if you have a real estate partnership or other business that relies heavily on sales Intellectual property: Depending on the type of business, a partner might contribute intellectual property like software code; if possible, estimate the value of the contribution based on similar intellectual property or its operational value to the partnership; this is not a common form of partnership contribution but may arise in a tech startup or software partnership About half of businesses with employees don’t survive past five years. One of the major causes of a business failing is undercapitalization — partners underestimate how much money they’ll need and how successful they’ll be early in business. Describing the contributions of each partner carefully in Article VI of your partnership agreement will help you better understand your business’ resources. 3. Article VII: Determine Ownership Interests Business ownership can be shared between partners in a way agreed upon by the partners. Often, ownership reflects the size of a partner’s contribution. However, ownership is more complicated if partner contributions aren’t easily valued or where partner roles and responsibilities aren’t equal. Use your partnership agreement to describe how your business ownership will be divided. Equal ownership isn’t appropriate where partners contribute things unevenly like: Property or cash: If one partner contributed a significantly larger amount of property or cash to the business, their greater risk should merit a greater ownership and returns Ideas: If one partner thought of the original business concept or otherwise completed the first steps toward creating the partnership, their ownership should be greater than their cash contributions Time: Conflicts can arise where one partner is working full-time and the other partners are working part-time; make sure this imbalance is reflected in that’s partner’s ownership Capital raises: Although venture capital raised by a partner is not a direct cash contribution, it should be recognized as part of his or her ownership interest If you don’t include partner contributions and ownership interests in your partnership agreement, you should list them elsewhere in your partnership’s records and provide them to each partner. An attorney can help identify partner contributions and determine the best ownership structure for your partnership. However, if your partnership contributions only include cash or other easily valued assets, use our template to draft a simple partnership agreement for free. Determining ownership interests can be easy if you’re basing it on each partner’s capital contribution. However, ownership interests can be more difficult to determine if your partners are contributing property or if some of your partners are dedicating time rather than assets. Check out monthly membership plan if you need to consult with an attorney about your partnership’s ownership structure. 4. Article VIII: Determine Profit & Loss Distribution Partners do not receive a salary for their role in a partnership. Instead, profits and losses are typically distributed among the partners in accordance with their ownership interests. Include details about how your business’s profits and losses will be distributed among members in Article VIII of your partnership agreement to avoid financial disputes between partners. Generally, a partnership’s profits and losses are distributed among partners based on each partner’s ownership percentage. If you choose this method, indicate in your partnership agreement that the partners must share in profits and losses in the same proportion as their ownership or capital contributions. When drafting Article VIII, address these issues regarding profits and losses: Division: Decide how you’ll divide profits and losses among owners; for example, it’s common to divide profits and losses based on each partner’s ownership percentage and/or relative capital contribution Calculation: Identify how distributions will be calculated; for example, you may calculate distributions based on a percentage of annual profits Timing: Indicate when you plan to distribute profits to the partners; this can be monthly, quarterly, annually and so on Reinvestment of profits: Have the partners determine whether a portion of the profits will be reinvested into the business each month or year 5. Article IX: Establish Voting Procedures A partnership’s voting procedures detail the way partners must vote to make decisions for the partnership. Article IX of your partnership agreement should specifically mention whether there must be a unanimous or majority vote. This section should also describe how much weight each partner’s vote will have. For example, Article IX of your partnership agreement can require that decisions of the partnership be determined by a majority vote with votes cast in the same percentage as capital contributions. Alternatively, you can require a unanimous vote of the partners, give each member’s vote equal weight regardless of their contribution or ownership percentage. 6. Article X: Describe Accounting Requirements Keep an accurate accounting of your partnership’s day-to-day business to maintain a comprehensive understanding of business financials and meet tax requirements. Use Article X of your partnership agreement to describe where the partnership’s books should be kept, when partners should have access to the books and how to report transactions to the partnership. This section should first state where the partnership’s books should be stored — usually at the principal place of business. Article X should also state that the accounting records should be available to all of the partners to inspect at any time. Finally, assert that partners have to report all partnership transactions accurately and as soon after the transaction as possible. 7. Article XI: Prepare for New Partners Businesses change and sometimes this includes adding partners. Because partnerships are structured around the partners, the addition of a partner changes the ownership structure of the business. Even if you don’t anticipate changes to your business, include procedures for adding new partners in Article XI of your agreement. Important information regarding new partners to incorporate into Article XI includes who has the power to add new partners, how to adjust partner responsibilities and how voting will be impacted. If you want the flexibility to add partners later on, allow the agreement to be amended to include new partners pending a unanimous vote of all partners. 8. Article XII: Define the Partnership’s Management & Authority Your partnership agreement should also describe your management structure and authority of partners to make business decisions. Describe how day-to-day partnership affairs will be managed and identify partner responsibilities and authority to borrow on credit, transfer assets and so on. Include this information in Article XII of your partnership agreement to avoid disputes regarding partners management and authority. It is important to establish what kind of authority partners have to make decisions on behalf of the business at the outset. Describe the powers of partners to manage business activities at the beginning of Article XII. This prevents a partnership from being responsible for the unauthorized actions of its members and ensures that creditors and other third parties understand the authorities of each member to enter into contracts, borrow credit and transfer assets. The day-to-day affairs of partnerships can be managed by a management committee made up of several partners. To form a committee, include terms in your partnership agreement describing how many partners should be on the committee, how they will be selected, and the scope of the committee’s authority. For example, you may choose to have three partners on the committee, chosen by a majority vote of the partners and who have authority to operate all partnership business. Types of commitments the partnership agreement should address include: Partnership contracts: Generally, a partner with authority to sign contracts on behalf of the partnership can sign a contract that binds all of the partners. Make sure you limit contract authority to partners with knowledge of the businesses needs. Partnership debt: If your business will have a credit card, loan, line of credit or other debts, make sure you specify who may sign for new debts in your partnership agreement. Depending on the business structure that you choose, each partner may be personally liable for any unpaid business debt. Partnership expenditures: If you want to limit expenditures made by partners on behalf of the business, limit who may make purchases without consulting other partners. Alternatively, establish a spending limit on purchases made without permission from other partners. Use Article XII of the partnership agreement to delineate each partner’s authority to sign contracts, open accounts and otherwise commit the partnership to avoid financial and contractual obligations that are not in the best interest of the partnership. For example, limit the amount of money a partner may spend for the business to $50,000 or less to make sure partners aren’t spending large sums of partnership assets on things the partnership doesn’t want or need. If you need help choosing how to manage your partnership or deciding how to limit partner authority, join membership plan for $39.99. Its nationwide team of On Call attorneys can help you decide how many partners should manage the business, how to choose managers and more. 9. Article XIII: Plan for Termination If there is a partnership agreement in place, a partnership can terminate whenever the partners desire. Use Article XIII of your agreement to specify how your partnership can terminate and describe how partners and partnership assets should be treated upon termination. Include details about whether the business should survive after a partner exits voluntarily or otherwise. In the absence of a partnership agreement, termination of a partnership occurs pursuant to state default rules. Under default rules, a partnership will terminate upon the death or bankruptcy of a partner or under other state-specific circumstances. Control how and when your partnership will terminate by explicitly listing termination events in your partnership agreement. 10. Article XIV: Decide How to Resolve Partner Disputes Disputes are an inevitable part of owning a small business. Conflicts between partners are especially dangerous because, left unresolved, they can cause your business to implode from within. Protect your business from by including language in the partnership agreement describing how and where disputes should be resolved between partners. One way to handle partnership disputes is requiring alternative dispute resolution (ADR). ADR uses a third party to reach an agreement between partners without litigation and includes practices like mediation and arbitration. Include terms requiring ADR in your partnership agreement to resolve disputes without the cost, hassle and public exposure that comes with litigation. Other options for dispute resolution include giving the business’ CEO the final say, voting based on ownership percentages, requiring a majority vote for businesses with an odd number of partners or giving a particular partner final say on discrete areas of the business. If you prefer to handle disputes in-house without the help of an ADR specialist, include language in your partnership agreement describing your preferred dispute resolution procedures. 11. Execute, File & Provide Copy to Partners Partnership agreement filing requirements depend on your business and your secretary of state’s office. Familiarize yourself with your state’s requirements to determine whether a formal filing is necessary for your partnership. Either way, make sure the partnership agreement is signed by every partner and that each partner receives a copy of the document for their records. Other Things to Include in a Business Partnership Agreement Depending on your partnership and business structure, you may need to include additional terms after Articles I through XIV of your partnership agreement. For example, describe partner responsibilities, how to handle new partners or what to expect during a partnership sale. If you have a complex partnership or anticipate changes to your business, include additional terms in your agreement. Other things you may want to include in your partnership agreement are: Partner Responsibilities & Commitments Generally, partners are involved in different departments of the business. To facilitate efficient organization of partnership roles and responsibilities, list expectations in the partnership agreement. If you want to establish work hours, vacation time allowances or a partner’s ability to work outside of the business, include these details in the partnership agreement as well. Selling the Business Selling a business can be one of the most difficult tasks partners face. Because the sale of a partnership is likely to cause disputes between partners, it’s important to establish transfer procedures. Use your partnership agreement to specify who’ll manage purchase offers, whether partners can force the sale of the business and the minimum business sale price. If you have a complex business or a large number of partners, you may need to include additional sections describing partner responsibilities, how to sell the business or what to do when someone leaves the partnership. Our free partnership agreement template is a great starting point, but check out if you need an agreement that includes additional, more complex terms. How a Business Partnership Agreement Works A partnership agreement is a legal document that formalizes business operations and creates a contract between partners. General partnership agreements also protect businesses from internal disputes, establish partner responsibilities and more. Your general partnership doesn’t have to file its agreement but keep a signed copy on file in case disputes arise. The three types of partnerships include: General partnership: A general partnership is the most basic form of partnership and does not require state filings or other formalities like annual meetings or ongoing state fees. Instead, a general partnership is formed each time partners come together to engage in business activities. This article and free template focus on what you should include in a general partnership agreement. Limited partnership: Limited partnerships (LPs) are typically reserved for finite projects like estate planning. This structure requires filing documents with the state and offers liability protection for its limited partners only. General partners, who oversee day-to-day business activities, have unlimited liability for the acts and debts of the LP. Limited liability partnership: Limited liability partnerships (LLPs) are more complex and can only be formed by certain types of professional businesses that require licensing under state law, like doctors, architects and attorneys. LLPs don’t protect partners from their own malpractice but a partner’s personal assets can’t be used to satisfy the debts of the LLP. Because partnerships are complex legal entities, we recommend hiring an attorney or using an online legal service to help choose a business structure and file it with the state. If you don’t want to spend money to hire an attorney, download our partnership agreement template to get started with a simple partnership agreement today. Who a Business Partnership Agreement is Right For Partnership agreements are legally binding contracts between business partners. Although not required by state law, even a simple partnership agreement will formalize your partnership’s management structure and protect it from internal disputes. If you have a partnership or an LLP, hire an attorney or use our free template to execute a partnership agreement. Benefits of a Business Partnership Agreement Having an enforceable partnership agreement for your business has several benefits. If drafted correctly and signed by all of the partners, a partnership agreement can protect your business from internal disputes and prepare partners for difficult management decisions. Familiarize yourself with the benefits of an enforceable partnership agreement before you start drafting one for your business. The benefits of having a partnership agreement include: Avoid State Default Rules States impose default rules on partnerships that don’t have a partnership agreement on file. Under default rules, partnerships terminate under certain circumstances and internal disputes must be resolved using default procedures. Avoid default outcomes by drafting a business partnership agreement describing how profits will be distributed, how the partnership may be terminated and other important procedures. Prevent & Resolve Disputes Among other important terms, business partnership agreements describe how partners must vote and who has authority to make decisions for the business. Partnership agreements also include resolution procedures in the event of a conflict between partners. Have dispute avoidance and resolution terms in place to protect your business from failing due to the disagreements between partners. Clarify Business Structure Drafting a business partnership agreement will help you and your partners outline how the business will be structured. By detailing the responsibilities and authority of each partner, a partnership agreement provides clarity and allows the partnership to be operated more efficiently. Include partner responsibilities and expectations within the partnership agreement to lend structure to your business. Facilitate Business Transition Transitions can occur in your business if a partner passes away, becomes otherwise incapacitated or chooses to leave the partnership. If you don’t provide for alternatives in your partnership agreement, default state laws will automatically dissolve your partnership upon the death or bankruptcy of a partner. Drawbacks of a Business Partnership Agreement A business partnership agreement can protect your business from internal disputes and other management issues. However, hiring an attorney to draft your agreement can be expensive. A partnership agreement may also restrict partner authority and delay decisions. Use our free partnership agreement template and choose broad language that doesn’t limit your partners’ authority more than necessary. The drawbacks of a business partnership agreement include: Costly to Draft Having an attorney draft legal documents for your business can get expensive. Use our free template to create a simple partnership agreement for your business or check out monthly membership plan if you want to consult with an attorney and save money on legal fees. Restrictive Language Formalizing your management responsibilities, voting structure, profit distribution and other elements of your partnership can restrict how partners behave. Although this is generally an advantage of having a partnership agreement, it can reduce flexibility in business operations by limiting partner authority and slowing down the decision-making process. The Bottom Line General partnerships are formed when two or more partners agree to enter into business together. A formal filing isn’t required to create a simple partnership but you should execute a partnership agreement that formalizes the business structure. Include terms like partner contributions, dispute resolution methods and profit sharing in your agreement to protect you and your business. Depending on your partnership, you may have to meet nuanced state filing requirements. If you need a simple partnership agreement for a general partnership, use our free template to get started. If your business is more complex, hire an attorney or use a legal service like for $39.99 per month to draft the necessary documents.