Your partnership better have a Partnership Agreement!

Two or more people who start a business together and don't take special steps are by default considered a partnership in most places. Partnerships are the business world's equivalent of a "marriage". Really simple and neat while everything is neat, but potentially very messy if it ends in divorce or breakup. A desirable answer for the marriage and partnership may be a good pre-nuptial agreement for the marriage and the partnership agreement for the partnership.

Sure, it's very embarrassing to admit thinking about divorce even before the marriage but it definitely can help avoid a lot of ill feelings and misunderstandings when trying to divide the marriage assets in a mutually acceptable way. Same with the partnership agreement. Further, the partnership agreement can also establish who makes decisions and how, how profits or losses should be divided, etc. And you should know that partners (except limited partners) are potentially responsible for any and all debt incurred by any partner "on behalf of the partnership". If Joe gets a Ferrari as his partnership vehicle but doesn't follow up with payments, you and any other partners may be responsible - partnership liability is far reaching and potentiall disasterous.

The other aspect, certainly in California, is that if you don't have your own partnership agreement, then by default the State of California will require you to abide by the California State partnership agreement. Dividing everything exactly 50%-50% may not be what you want or desire or what would be reasonable, but it's what you get by default.

Bottom line, if you must use a partnership, make sure you have your own partnership agreement. Better yet, consider a corporation or limited liability company instead.