A contract defining how business profits will be calculated and distributed among partners, employees, or stakeholders.
PROFIT SHARING AGREEMENT
This Profit Sharing Agreement ("Agreement") is entered into on [DATE] between:
PARTY 1: [FULL NAME / COMPANY NAME]
PARTY 2: [FULL NAME / COMPANY NAME]
(Collectively, the "Parties")
1. PURPOSE
The Parties enter into this Agreement to define the terms under which profits generated by [BUSINESS NAME / PROJECT NAME] (the "Business") will be shared among the Parties.
2. PROFIT CALCULATION
"Net Profit" means gross revenue of the Business less all operating expenses, taxes, and agreed-upon deductions. The following deductions shall be made before profit distribution:
- Operating expenses: [DESCRIPTION]
- Reserve fund contribution: [AMOUNT or PERCENTAGE]%
- [OTHER DEDUCTIONS]
3. PROFIT DISTRIBUTION
Net Profits shall be distributed as follows:
- [PARTY 1 NAME]: [PERCENTAGE]%
- [PARTY 2 NAME]: [PERCENTAGE]%
Total: 100%
4. PAYMENT SCHEDULE
Profit distributions shall be made [FREQUENCY, e.g., quarterly / annually] within [DAYS] days following the end of each [PERIOD]. Distributions require a written profit and loss statement prepared by [ACCOUNTANT / PARTY RESPONSIBLE].
5. RECORDS AND AUDIT
The Parties agree to maintain accurate financial records of the Business. Each Party has the right to inspect and audit the Business's financial records upon [NOTICE PERIOD] written notice.
6. LOSSES
In the event of a net loss, such loss shall be shared by the Parties in proportion to their profit-sharing percentages unless otherwise agreed in writing.
7. CHANGES TO PROFIT SHARING
The profit-sharing percentages set forth herein may only be modified by written agreement signed by all Parties.
8. TERM
This Agreement commences on [START DATE] and continues until [END DATE / until terminated by mutual written agreement].
9. GOVERNING LAW
This Agreement is governed by the laws of [STATE/JURISDICTION].
PARTY 1: _________________ PARTY 2: _________________
[PARTY 1 NAME] [PARTY 2 NAME]
Date: ___________ Date: ___________
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A Profit Sharing Agreement template establishes how profits from a business, project, or venture will be calculated and distributed among partners, co-founders, or stakeholders. This free profit sharing agreement covers profit calculation methodology, distribution percentages, payment schedule, financial record-keeping, audit rights, and loss-sharing provisions. Use this profit sharing agreement template for business partnerships, joint ventures, employee profit sharing plans, co-founder arrangements, and revenue sharing partnerships. A clearly drafted profit sharing agreement prevents future disputes by defining exactly what counts as profit, when distributions occur, and how the arrangement can be modified.
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Absolutely. All placeholder fields (marked with brackets) can be replaced with your specific details. We recommend reviewing the final version with a legal professional for high-stakes agreements.
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