What Is a Business Partnership?
A business partnership is a legal relationship that is most often formed by a written agreement between two or more individuals or companies. The partners invest their money in the business, and each partner benefits from any profits and sustains part of any losses.
The partnership as a business often must register with all states where it does business. Each state may have several different kinds of partnerships that you can form, so it's important to know the possibilities before you register.1
How Does a Partnership Work?
Some partnerships include individuals who work in the business, while other partnerships may include partners who have limited participation and also limited liability for the business's debts and any lawsuits filed against it.2
A partnership, as opposed to a corporation, is not a separate entity from the individual owners. A partnership is similar to a sole proprietor or independent contractor business because wiboth of those types of businesses, the business isn't separate from the owners for liability purposes.3
Income tax is not paid by the partnership itself. After profits or losses are divided among the partners, each partner pays income tax on their individual tax return.4
Types of Partnerships
Before you start a partnership, you will need to decide what type of partnership you want. There are three different kinds that are commonly set up.
- A general partnership (GP) consists of partners who participate in the day-to-day operations of the partnership and who have liability as owners for debts and lawsuits.5
- A limited partnership (LP) has one or more general partners who manage the business and retain liability for its decisions and one or more limited partners who don't participate in the operations of the business and who don't have liability.6
- A limited liability partnership (LLP) extends legal protection from liability to all partners, including general partners.7 An LLP is often formed by partners in the same professional category, such as accountants, architects, and lawyers. The partnership protects partners from liability from the actions of other partners.8 9
Types of Partners in a Partnership
Partners may be individuals, groups of individuals, companies, and corporations.1 Depending on the type of partnership and the levels of partnership hierarchy, a partnership can have different types of partners.
- General partners and limited partners: General partners participate in managing the partnership and often have liability for partnership debts and obligations. Limited partners invest but do not participate in management.10
- Different levels of partners: For example, there may be junior and senior partners. These partnership types may have different duties, responsibilities, and levels of input and investment requirements.
The partnership as a business often must register with all states where it does business. Each state may have several different kinds of partnerships that you can form, so it's important to know the possibilities before you register.1
How Does a Partnership Work?
Some partnerships include individuals who work in the business, while other partnerships may include partners who have limited participation and also limited liability for the business's debts and any lawsuits filed against it.2
A partnership, as opposed to a corporation, is not a separate entity from the individual owners. A partnership is similar to a sole proprietor or independent contractor business because wiboth of those types of businesses, the business isn't separate from the owners for liability purposes.3
Income tax is not paid by the partnership itself. After profits or losses are divided among the partners, each partner pays income tax on their individual tax return.4
Types of Partnerships
Before you start a partnership, you will need to decide what type of partnership you want. There are three different kinds that are commonly set up.
- A general partnership (GP) consists of partners who participate in the day-to-day operations of the partnership and who have liability as owners for debts and lawsuits.5
- A limited partnership (LP) has one or more general partners who manage the business and retain liability for its decisions and one or more limited partners who don't participate in the operations of the business and who don't have liability.6
- A limited liability partnership (LLP) extends legal protection from liability to all partners, including general partners.7 An LLP is often formed by partners in the same professional category, such as accountants, architects, and lawyers. The partnership protects partners from liability from the actions of other partners.8 9
Types of Partners in a Partnership
Partners may be individuals, groups of individuals, companies, and corporations.1 Depending on the type of partnership and the levels of partnership hierarchy, a partnership can have different types of partners.
- General partners and limited partners: General partners participate in managing the partnership and often have liability for partnership debts and obligations. Limited partners invest but do not participate in management.10
- Different levels of partners: For example, there may be junior and senior partners. These partnership types may have different duties, responsibilities, and levels of input and investment requirements.
Source: https://www.thebalancesmb.com/what-is-a-business-partnership-398402#:~:text=A%20business%20partnership%20is%20a%20legal%20relationship%20that%20is%20most,sustains%20part%20of%20any%20losses.
More link: https://www.investopedia.com/terms/p/partnership.asp
What Are the Advantages and Disadvantages of a Partnership?
Link: https://www.americanexpress.com/en-us/business/trends-and-insights/articles/what-are-the-advantages-and-disadvantages-of-a-partnership/
Advantages and disadvantages of a partnership business
Link: https://www.informdirect.co.uk/business-management/partnership-business-advantages-and-disadvantages/
What Is a Corporation?
A corporation is a legal entity that is separate and distinct from its owners.1 Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. Some refer to it as a "legal person."
Link: https://www.investopedia.com/terms/c/corporation.asp
Types of Corporation
Link: https://corporations.uslegal.com/types-of-corporation/
https://www.businessnewsdaily.com/15805-corporation-advantages-and-disadvantages.html#:~:text=Advantages%20of%20a%20corporation%20include,formalities%20and%20protocols%20to%20follow.
https://www.accountingtools.com/articles/corporation-advantages-and-disadvantages.html
https://www.wikiaccounting.com/corporation-advantages-and-disadvantages/