Financial
Profit Sharing Agreement
Financial arrangement defining how business profits are distributed among employees, partners, or stakeholders based on performance metrics, vesting schedules, and contribution formulas.
Key Clauses
1
Profit Definition
Defines how profits are calculated, including revenue, expenses, and adjustments.
2
Allocation Formula
Specifies each participant's share percentage and the basis for allocation.
3
Distribution Schedule
Sets timing and frequency of profit distributions (monthly, quarterly, annually).
4
Vesting Requirements
Establishes conditions or time periods before participants earn full profit shares.
5
Tax Responsibilities
Clarifies each party's tax obligations on distributed and undistributed profits.
Use This Template
When You Need This
- Business partners formalizing how profits will be shared
- Creating employee profit-sharing plans as incentive compensation
- Joint venture participants defining revenue distribution terms
- Establishing vesting schedules for profit-sharing arrangements