Partnership

A business relationship in which two or more persons carry on an enterprise for profit. Partners share ownership and responsibilities under an agreement and applicable law.

Partnership agreement: A contract setting out partners’ rights, duties, contributions, and procedures for running a partnership. It can specify how profits are divided and how decisions or departures are handled.
Sole proprietorship: A business owned and operated by one person without a separate legal entity. Unlike a partnership, it has one owner rather than multiple co-owners.
General partnership: A partnership in which partners commonly share management authority and may bear personal liability for business obligations. It is the basic form in which partners directly conduct the enterprise.
Partnership formation: The creation of a partnership through agreement or conduct meeting the requirements of applicable law. A partnership may arise from how people conduct a profit-seeking business, even without a formal contract.
Limited liability: A legal protection that generally prevents business creditors from claiming an owner’s personal assets for entity debts. General partners often lack this protection, unlike owners of many corporations and limited liability companies.
Fiduciary duty: A legal duty to act loyally and in good faith for another person or organization when entrusted with responsibility. Partners generally owe one another duties of loyalty and good faith.
Corporation: A legal entity separate from its owners, generally with shares, directors, and limited shareholder liability. A corporation typically separates ownership from management and limits owners’ liability.
Limited partnership: A partnership with general partners who manage the business and limited partners whose liability is generally tied to their investment. It allows some investors to contribute capital without taking on general-partner responsibilities.
Partner authority: The legal power of a partner to act for and bind the partnership in dealings with others. A partner’s ordinary business acts can create obligations for the firm and its co-partners.
Pass-through taxation: A tax system in which business income is reported by owners rather than taxed first at the entity level. Partnership income is commonly allocated to partners for reporting on their tax returns.

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