Partnership is a type of business organization in which two or more individual's pool money, skills, and other resources, and share profit and loss in accordance with the terms of the partnership agreement. In absence of such agreement, a partnership is assumed to exist where the participants in an enterprise agree to share the associated risks and rewards proportionately. There are two main types of partnership the general partnership, the limited partnership, limited liability corp. (LLC) and the limited liability partnership (LLP).
In a general partnership the partners are responsible for managing the company. They also assume the responsibility for the partnership's debt and other obligations. For example, if a partnership is delinquent on a payment to a creditor, the partners' personal assets are likely going to be liquidated to make payments to the creditor. By default, profits are shared equally amongst the partners. However, a partnership agreement will almost always express the manner how profit and losses will be shared.
Each general partner is deemed a representative of the partnership. A partnership will terminate upon the death, disability, or even withdrawal of any one partner. However, most partnership agreements provide for these types of events, with the share of the departed partner usually being purchased by the remaining partners in the partnership.
A limited partnership has both general and limited partnership. A limited partnership does not participate in the day-to-day management of the partnership and his/her liability is limited. In many cases, the limited partners are merely investors who do not wish to participate in the partnership other than to provide an investment and to receive a share of the profits.
A Limited Liability Corp (LLC) is available as a replacement to the general partnership this form of a business restricts the liability to a partner. The...