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Profit Split Agreement Template
Clearly document profit calculations, expenses, and payout rules with this Profit Split Agreement Template.
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Profit Split Agreement Template
This Profit Split Agreement (the “Agreement”) is entered into as of [Effective Date] by and between:
Party A: [Full Legal Name], with an address at [Address] (“Party A”).
Party B: [Full Legal Name], with an address at [Address] (“Party B”).
☐ Additional Parties (attach list): [Party C, Party D, etc.]
Each may be referred to as a “Party,” and together as the “Parties.”
1. Purpose and Term
1.1 Purpose. The Parties agree to collaborate on: [Project/Business/Activity] (the “Project”) and to share profits as described in this Agreement.
1.2 Term. This Agreement starts on the Effective Date and continues until: ☐ Project completion ☐ [End date] ☐ Terminated under Section 11.
2. Definitions
2.1 Revenue. All amounts actually received from the Project, including: [Sales, subscriptions, licensing, ads, etc.].
2.2 Approved Expenses. Expenses that are: (a) necessary for the Project, (b) documented with receipts/invoices, and (c) permitted under Section 4.
2.3 Profit. Profit equals Revenue minus Approved Expenses, and minus any reserves described in Section 5 (if applicable).
2.4 Accounting Period. ☐ Weekly ☐ Monthly ☐ Quarterly ☐ Other: [Period].
3. Profit Split
3.1 Split Percentages. Profit will be split as follows:
Party A: [__]%
Party B: [__]%
Additional Parties: [__]%
3.2 Changes. Any change to split percentages must be in writing and signed by all Parties.
4. Expenses and Spending Rules
4.1 Pre-Approval Threshold. Any single expense over $[] requires written approval from: [Names/Roles].
4.2 Budget (Optional). Total expenses are capped at $[] per [month/project], unless approved otherwise.
4.3 Non-Allowable Expenses. The following are not Approved Expenses unless expressly approved in writing:
Personal expenses
Penalties, fines, interest, and late fees
Unapproved travel/entertainment
Costs unrelated to the Project
4.4 Payment of Expenses. Expenses will be paid by: ☐ Party A ☐ Party B ☐ Shared account ☐ Other: [Method].
4.5 Reimbursement (If Applicable). If a Party pays an Approved Expense, reimbursement is due within [__] days after providing documentation.
5. Reserves (Optional)
5.1 Reserve Amount. The Parties will hold back a reserve of: ☐ $[] ☐ []% of Revenue ☐ Other: [Rule] to cover: refunds, chargebacks, taxes, or unexpected costs.
5.2 Release of Reserve. Reserves will be released: ☐ Monthly ☐ Quarterly ☐ After [Event], unless needed for outstanding obligations.
6. Accounting and Reporting
6.1 Books and Records. The Parties will maintain accurate records of Revenue and Expenses in: [Tool/accounting system].
6.2 Statements. A profit statement will be provided within [] days after each Accounting Period.
6.3 Review Rights. Each Party may reasonably review supporting documentation upon [] days’ notice.
6.4 Dispute Window. Any objection must be raised within [__] days after statement delivery.
7. Distributions
7.1 Distribution Schedule. Profit distributions will be made: ☐ Monthly ☐ Quarterly ☐ Per milestone ☐ Other: [Schedule].
7.2 Distribution Method. Payments will be made by: ☐ Bank transfer ☐ ACH ☐ PayPal ☐ Other: [Method].
7.3 Taxes. Each Party is responsible for its own taxes on distributions unless otherwise required by law.
8. Responsibilities
8.1 Party Responsibilities.
Party A will: [Responsibilities]
Party B will: [Responsibilities]
8.2 Authority. No Party may bind another Party to obligations outside this Agreement without written consent.
9. Confidentiality (Optional)
9.1 Confidential Information. Revenue, expenses, customer lists, pricing, and operational details are confidential.
9.2 Permitted Disclosures. Disclosure is allowed to accountants, attorneys, or as required by law.
10. Dispute Resolution
10.1 Good-Faith Negotiation. The Parties will attempt to resolve disputes informally first.
10.2 Escalation. If unresolved, escalate to: [Executive contacts].
10.3 Forum (Optional). Disputes will be resolved by: ☐ Mediation ☐ Arbitration ☐ Court in [County/State].
11. Termination
11.1 Termination for Convenience. Any Party may terminate with [] days’ written notice.
11.2 Termination for Cause. A Party may terminate for material breach not cured within [] days after notice.
11.3 Final Accounting. Within [__] days after termination, a final accounting will be prepared and final distributions made after deducting Approved Expenses and reserves.
12. Miscellaneous
12.1 Independent Contractors. The Parties are independent contractors and not partners in a legal partnership unless stated otherwise.
12.2 Entire Agreement. This Agreement is the entire agreement about profit splitting for the Project.
12.3 Amendments. Amendments must be in writing and signed by all Parties.
12.4 Assignment. No Party may assign without written consent of the others.
12.5 Governing Law. This Agreement is governed by the laws of [State/Country].
12.6 Notices. Notices must be delivered to the addresses above or updated contacts provided in writing.
Signatures
By signing below, the Parties agree to this Profit Split Agreement as of the Effective Date.
Party A: [Full Legal Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
Party B: [Full Legal Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
Additional Party (Optional): [Full Legal Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
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Profit Split Agreement Template
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For quick answers, scroll below to see the FAQ.
PROFIT SPLIT AGREEMENT TEMPLATE FAQ
What is a profit split agreement?
A Profit Split Agreement is a contract where two or more parties agree on how profits from a business, deal, or project will be calculated and distributed. It clarifies what counts as “profit,” what expenses are deducted, who gets what percentage, and when payouts happen.
When should you use a profit split agreement?
Use it when partners collaborate on a project, referral arrangement, joint venture, content channel, e-commerce business, or any shared revenue activity where each party expects a defined share of profits. A written agreement helps avoid disputes over expenses and timing.
How do you define “profit” in a clear way?
Many agreements define profit as revenue received minus approved expenses (and sometimes taxes or reserves). The key is to list which expenses are deductible, how they must be documented, and whether there’s a cap or pre-approval for spending.
How often should profits be distributed?
Common schedules are monthly, quarterly, or per project milestone. Some parties distribute only after costs are recovered or after a reserve is held back for refunds, chargebacks, or unexpected costs. This template includes customizable options.
What happens if partners disagree about expenses or calculations?
A good agreement includes recordkeeping rules, access to financial records, a dispute window to object to statements, and a process for resolving disagreements (good-faith negotiation, escalation, mediation/arbitration).
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