"Profit-Sharing Agreement Template"

What Is a Profit-Sharing Agreement?

A Profit-Sharing Agreement is a legal contract that regulates the process of sharing partnership profits between involved parties. Its main purposes are to formalize the order of how the profits should be divided, determine who is participating in the profit partitioning, and secure the position of the parties involved in this agreement.

Generally, a letter of agreement for profit sharing can be signed between business partners who are members of the partnership (or of a joint venture). Nevertheless, sometimes the contract is signed between a company and its employee, who receives a part of the profit in addition to their salary. In this case, the received payment can depend on the profit that the company has received during an estimated period of time, or on the profit that the company has gained due to their employee's efforts.

A Profit-Sharing Agreement template can be downloaded below, or you can make your own using our online form builder.

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How to Write a Profit-Sharing Agreement?

Writing the agreement is a straightforward process, during which the parties are supposed to describe the profit-sharing process and regulate its key parts. A Profit-Sharing Agreement template should contain several sections, which can include the following:

  1. Introduction. The document should start with a title, it will help to express the nature of the document. After that, the involved parties should designate their names and locations, including the zip code, state, county, street name, and building number.
  2. Nature of the Relationship. In this part of the document, the parties should state the reason for dividing the profit. For example, if it is a joint venture Profit-Sharing Agreement, then the parties should designate the requisites of a Joint Venture Agreement. If the profit-sharing is taking place between the members of the partnership, then the parties should designate information about their partnership.
  3. The Subject. Here the parties should describe the process of sharing the profits. It should contain information about how it will be divided, how often it will happen, and what is included in it. For example, parties can state that the profit will be shared in accordance with how much they have invested in the company (their partnership shares).
  4. Parties' Rights and Responsibilities. Parties use this section to designate their primary rights and responsibilities, which can depend on a lot of important aspects, such as the circumstances of the situation, the conditions the parties have agreed on, etc.
  5. Governing Law. Here the parties enter the state law in accordance with which the agreement will be construed and governed.
  6. Contact Information. For notification purposes, the parties should enter their contact information, such as a postal address, telephone number, and email. This information will be used for all official notifications, letters on the subject of this agreement, etc.
  7. Signatures. To express their consent with the contents of this document and state that the parties are entering the agreement fully lucid and under their own free will, they should sign the contract and date it.

The parties can negotiate and include other parts in the agreement, such as severability, representatives, jurisdiction, a non-disclosure clause, contract termination, etc.


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Profit-Sharing Agreement
This ​ P rofit-Sharing Agreement (hereinafter referred to as the “Agreement”) is entered
into as of ________________ by and between _____________________, with a mailing
address of ______________________________________________________________
___________ (hereinafter referred to as the “Employer”) and _____________________,
with a mailing address of ___________________________________________________
____________________________________ (hereinafter referred to as the “Employee”),
collectively referred to as the “Profit Sharers,” both of whom agree to be bound by this
Agreement.
1. Qualifying Member. ​ A Qualifying Member is a person or people authorized by the
officers of the Employer to be eligible for payouts.
2. Term. ​ A ll financial payouts are available for viewing, but under no circumstances,
unless authorized by the President of the Employer, can any payment be written or paid
to by any member of the Employer other than the Qualifying Member.
The Qualifying Member must have authorization from any company officer for
Employee payment.
3. Payouts. Payouts will be made on the last day of each and every month for work
completed within that qualifying month. Payouts are not valid for sessions of said
Operations when the employee is not actively engaged, either in providing the
services/sales or ensuring their successful completion.
Operations, as stated in the table below, will refer to any ongoing or finished work in
relation to this Agreement
4. Method. ​ B elow is the standard responsibility of the Employer for payouts and
profit-sharing in order of financial distribution based on per project, job, or shift. No
payouts will be given until the balance of said operation is paid in full to the Employer.
5. Profit Sharing. Any and all profits after expenses, specific to the Operations defined,
are eligible for profit sharing. Profits will be calculated as sales for that period minus
expenses for that period, leveraging Generally Accepted Accounting Principles.
6. Modifications. ​ T his instrument may not be changed orally. Any modifications of this
agreement must be by a written supplemental agreement executed by all parties thereto.
©​ ​ ​ ​ ​ ​ ​
T EMPLATEROLLER.COM
Profit-Sharing Agreement
This ​ P rofit-Sharing Agreement (hereinafter referred to as the “Agreement”) is entered
into as of ________________ by and between _____________________, with a mailing
address of ______________________________________________________________
___________ (hereinafter referred to as the “Employer”) and _____________________,
with a mailing address of ___________________________________________________
____________________________________ (hereinafter referred to as the “Employee”),
collectively referred to as the “Profit Sharers,” both of whom agree to be bound by this
Agreement.
1. Qualifying Member. ​ A Qualifying Member is a person or people authorized by the
officers of the Employer to be eligible for payouts.
2. Term. ​ A ll financial payouts are available for viewing, but under no circumstances,
unless authorized by the President of the Employer, can any payment be written or paid
to by any member of the Employer other than the Qualifying Member.
The Qualifying Member must have authorization from any company officer for
Employee payment.
3. Payouts. Payouts will be made on the last day of each and every month for work
completed within that qualifying month. Payouts are not valid for sessions of said
Operations when the employee is not actively engaged, either in providing the
services/sales or ensuring their successful completion.
Operations, as stated in the table below, will refer to any ongoing or finished work in
relation to this Agreement
4. Method. ​ B elow is the standard responsibility of the Employer for payouts and
profit-sharing in order of financial distribution based on per project, job, or shift. No
payouts will be given until the balance of said operation is paid in full to the Employer.
5. Profit Sharing. Any and all profits after expenses, specific to the Operations defined,
are eligible for profit sharing. Profits will be calculated as sales for that period minus
expenses for that period, leveraging Generally Accepted Accounting Principles.
6. Modifications. ​ T his instrument may not be changed orally. Any modifications of this
agreement must be by a written supplemental agreement executed by all parties thereto.
©​ ​ ​ ​ ​ ​ ​
T EMPLATEROLLER.COM
7. Termination. This Agreement is terminated upon the termination of the employee or
the end of the employee's involvement in said Operations.
Operation:
Amount (Profit After Expenses):
_________________________________
_________________________________
Operation One
Operation One Percent of Profit After Expenses
_________________________________
_________________________________
Operation Two
Operation Two Percent of Profit After Expenses
_________________________________
_________________________________
Operation Three
Operation​
T hree​
P ercent​
o f​
P rofit​
A fter​
E xpenses
_________________________________
_________________________________
Operation Four
Operation Four Percent of Profit After Expenses
_________________________________
_________________________________
Operation Five
Operation Five Percent of Profit After Expenses
Total
Payout
Per
Operation
is
Equal
or
Less
Than
100%:
__________________________
8. Severability. ​ I n the event that any provision of this Agreement is deemed invalid or
unenforceable, in whole or in part, that part shall be severed from the remainder of the
Agreement and all other provisions should continue in full force and effect as valid and
enforceable.
9. Legal and Binding Agreement. ​ T his Agreement is legal and binding between the
Profit Sharers as stated above. This Agreement may be entered into and is legal and
binding both in the United States and throughout Europe.
The Profit Sharers each represent that they have the authority to enter into this
Agreement.
10. Governing Law. ​ T he Profit Sharers agree that this Agreement shall be additionally
governed by the laws of _____________________.
State
©​ ​ ​ ​ ​ ​ ​
T EMPLATEROLLER.COM
The Profit Sharers agree to the terms and conditions set forth above as demonstrated by
their signatures as follows:
_________________________________
_________________________________
Employee’s Printed Name
Employer’s Printed Name
_________________________________
_________________________________
Employee’s Signature
Employer’s Signature
_________________________________
_________________________________
Date
Date
©​ ​ ​ ​ ​ ​ ​
T EMPLATEROLLER.COM
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