I’ve been working informally with an influencer agency partner on a few campaigns, and things have gone pretty well. Revenue’s flowing, clients are happy, and there’s been minimal friction. But now my partner is asking about formalizing things—maybe moving to a formal agreement, committing to consistent referral targets, that kind of thing.
Which is great, but I’m hesitant. Formalizing things means:
- Legal costs
- Locked-in revenue splits
- Expectations about response time and commitment
- General overhead
And honestly, I’m asking myself: Do we actually need that yet? Or are we better off keeping things flexible while we’re still learning how to work together?
I’ve heard from some people that formal agreements kill the relationship, and from others that they’re absolutely necessary if you want to scale. I’m not sure who’s right.
So here’s my real question: What’s the threshold for you? At what point does a working partnership have to become formal? Is it revenue-based? Complexity-based? Or is it just about reducing the risk if things go wrong?
Also—if you’ve done this, what did you actually put in that first formal agreement, and did you regret any of it?
This is actually a really important question because getting it wrong costs real money.
Here’s my framework: Formalize when you can’t absorb the downside of things going wrong.
Informally, that might mean:
- You’re comfortable losing 5-10k if someone disappears mid-project
- You can survive if they stop referring clients
- You have enough cash flow to cover mistakes
Once you cross certain thresholds—project sizes above $50-100k, ongoing revenue representing 20%+ of your income, more than 5 simultaneous projects—the risk profile changes. Losing $5k sucked. Losing $150k because someone didn’t deliver and there’s no recourse? That’s a business threat.
Other signals to formalize:
- Reputation risk: If this partner’s work directly reflects on your brand, you probably need contractual language around quality standards.
- Competition risk: If your partner starts working with your competitors, do you care? A formal agreement can address that.
- Scale: If you’re referring or receiving consistent volume, you need documented processes.
- Regulatory: Cross-border work sometimes triggers compliance questions. An agreement documents that you’ve thought about this.
What I’d NOT put in a first formal agreement:
- Exclusive arrangements (you’re both too new)
- Multi-year commitments (test for at least 6 months first)
- Specific revenue guarantees (too unpredictable early on)
WHAT I would put in:
- Working definition of each person’s responsibilities
- How disputes get resolved
- Payment terms (when money moves)
- Confidentiality clauses
- How either person exits (30 days notice, finish current projects, then separate)
I’ve regretted trying to be too specific too early. The agreement that worked best was 3 pages, not 20. It outlined principles, not procedures. Left room for the partnership to evolve.
Ask yourself: If this partnership ended tomorrow, would there be a financial or reputational problem I couldn’t handle? If yes, formalize it now. If no, probably fine staying informal while you test.
I’m going to give you a slightly different take.
Formalizing isn’t about controlling the relationship—it’s about documenting what’s already working. If things are going well, the agreement should just describe what you’re already doing, not change it.
I’ve seen partnerships killed by agreements that tried to optimize or constrain things. I’ve never seen one damaged by simply writing down “here’s how we’re working now.”
So if you and your partner are already aligned on revenue splits, communication protocols, and quality standards, putting that in a document isn’t restricting you—it’s protecting you both.
Here’s when to formalize:
- When you’re about to introduce a significant new client to work together on
- When revenue from the partnership crosses a threshold you care about (for me, that was $10k/month)
- When you want to scale it intentionally instead of letting it happen organically
- When there are geographic or regulatory nuances (definitely relevant for international work)
If you’re genuinely happy with how things are, you can keep testing. But I’d suggest at least having a conversation where you both say “here’s what’s working for us right now.” That clarity alone prevents a lot of problems.
About legal costs—an actual attorney for a simple partnership agreement in the US runs $1-3k, maybe less if you use a template. For cross-border, might be more. But if you’re doing $50k+ projects and the partnership is meaningful to you, that’s insurance money, not an unnecessary cost.
Don’t formalize because someone told you to. Formalize because you can see where informal breaks down and you want to prevent it.
I love this because I think the relationship itself is what matters most, and the agreement just protects it.
Here’s how I think about it: An agreement is necessary when there’s money flowing and expectations around future work. So ask yourself:
- Is there money involved and will there be more? Yes → you need something documenting how it works
- Do you both expect this to continue indefinitely? Yes → agreement helps
- Are you comfortable operating on a handshake and renegotiating each time? If no → agreement
I’ve seen incredible partnerships done completely informally because both people genuinely wanted to make it work. I’ve also seen formal agreements safeguard partnerships that might otherwise have fallen apart.
The truth? It depends on who you’re working with. If your partner brings this up, that’s usually a good sign—they’re thinking about the relationship long-term and want it protected. Treating that as a threat is probably the wrong instinct.
What I’d suggest: Have a conversation (not a negotiation) where you both say, “We’ve had great results so far. Let’s talk about what structure would help us keep doing this well as we scale.”
Then decide: Do you need a formal agreement, or would a simple 1-page memorandum of understanding suffice? Sometimes the answer isn’t “full contract” or “nothing”—it’s a lightweight document that just clarifies expectations.
For a cross-border partnership specifically, I’d lean toward at least something in writing because time zones, currencies, and regulations all add complexity. Having documentation makes everything clearer.
Real talk from someone who’s done international expansion: You need something in writing once you’re crossing borders. Maybe not a huge contract, but something.
Why? Because if anything goes wrong, you need to know which country’s laws apply, how disputes get settled, what happens to projects in flight, etc. With a domestic partner, you can probably work it out. With someone international? You need clarity.
I formalized my first cross-border partnership after maybe 4 months of working together and $30k in revenue. That felt right—enough time to see if we worked, enough money at stake to justify a simple agreement.
My agreement covered:
- Roles and responsibilities (who does what)
- Revenue split (when it’s paid, how)
- Communication expectations
- What happens if one person wants to stop
- Which country’s laws govern disputes
That was literally it. 2 pages, nothing fancy.
I did not include:
- Exclusivity
- Long-term commitments
- Specific revenue targets (partnerships that start with growth pressure often fail)
Took maybe 2 weeks with a lawyer to finalize. Would have taken 1 week if I’d been more decisive. Total cost was maybe $1500 including legal review.
Worth it? Absolutely. Prevented questions later about who was responsible for what, and made scaling much clearer.
If you want to stay informal, that’s fine. But at minimum, have a conversation where you document the key decision points. Email it to yourself and your partner so you both have a record.
From my perspective, formalize when it matters to you emotionally and financially. If you’re bringing in clients because they trust you and you’re confident in your partner, protecting that with an agreement makes sense.
I think the informal vs. formal thing is less about contract status and more about reliability. Do you trust this person? Will they show up? Will they do good work? If the answers are yes, an agreement just documents that trust. If you’re questioning whether they’re reliable, an agreement won’t fix it.
The only time I’ve seen agreements actually cause problems is when people used them as tools to change the relationship instead of document it. So if you and your partner already work well together, don’t use an agreement to impose new expectations.
I’d probably formalize once you’re sending regular clients their way or vice versa. Once it’s part of your operating rhythm, document it so there are no surprises.
Also—and this might be worth thinking about—what does your partner want? Sometimes the person asking to formalize is looking for reassurance, not control. Might be worth having an honest conversation about what they’re hoping an agreement accomplishes.