Partnership
A partnership involves two or more persons who carry on a
trade or business. Each person contributes money, property,
labor, or skill, expects to share in the profits and losses, and
carries on as a co-owner of the business. A partnership can be
formed by oral agreement between two or more persons, but a legal
partnership agreement is highly recommended. Just like sole
proprietorships, no formal paperwork is required unless the
partnership will be doing business under a trade name or a DBA.
Check with the city or county government where the business is
located for appropriate filing requirements. Since partners are
co-owners, they share financial and management control. The
partners are personally liable for any debts incurred by the
business. In general, death or withdrawal of any partner
terminates the partnership unless there's agreement among the
partners. Partnership is not a taxable entity. Each partner
includes his or her share of the partnership's income or loss on
his or her tax return.
Variations
Limited partners have limited personal liability for claims
against the business. However, they are not involved with the
management or operation of businesses. They have no control over
the business. Most states required filing of formal agreement for
a limited partnership.
