A Partnership

A partnership is a separate legal entity created by two or more individuals who engage in business for profit. Partnerships are not difficult to set up and operate, but to protect each partner, a comprehensive partnership agreement should define each person’s interest, liability, and role within the partnership.

A partnership is a form of ownership that involves two or more owners controlling a business. The joint owners may run the day-to-day activities by themselves or through appointed representatives. In a partnership, the owners sign a formal agreement that clearly states a partner's rights, shares and responsibilities.Business leaders typically divide partnerships into limited liability partnerships and unlimited liability partnerships. Here's how these types of partnerships work:

Advantages of a partnership include:

Limited partnerships and limited liability partnerships offer some degree of liability protection for partners

.Partnerships are easy to maintain because they do not require annual meetings or minutes of meetings.

Partnerships do not pay corporate taxes. The profits and losses pass through the business to each partner, according to the partner’s interest in the business.

Can be used by professionals who may not be able to create an LLC.

Disadvantages of a partnership include:

Individual partners may bear the liability for the actions of other partners.

Partners may have unlimited personal liability for debts and losses, except in the case of limited liability partnerships and limited partnerships.

If a partnership is created without a written agreement or a partnership agreement is poorly drafted, there could be significant disputes that may lead to costly litigation.