Partnerships FAQs Back to All FAQs

Are there special rules for running a business partnership?

Yes, there are special rules that apply to running a business partnership. Partnerships are governed by the Uniform Partnership Act (UPA) or Revised Uniform Partnership Act (RUPA), which are sets of laws that govern the rights and responsibilities of partners in a partnership.

Here are some important rules to keep in mind when running a business partnership:

Decision-making: In a partnership, all partners have a say in the management of the business, and major decisions must be made by unanimous consent. However, the partnership agreement can specify different voting procedures for different decisions.

Profit and loss sharing: Partnerships share profits and losses equally unless the partnership agreement specifies a different arrangement.

Liability: Partners in a partnership are personally liable for the debts and obligations of the business, which means their personal assets are at risk if the business is sued or cannot pay its debts.

Dissolution: A partnership can be dissolved if one partner decides to leave the partnership, if the partnership agreement specifies a termination date, or if the business is no longer financially viable.

Record-keeping: Partnerships are required to keep accurate financial records, including income statements, balance sheets, and cash flow statements.

Taxation: Partnerships are not taxed at the entity level, which means that profits and losses flow through to the partners, who report them on their personal tax returns.

It's important to note that the specific rules for running a partnership may vary depending on the state and the partnership agreement. It's recommended that you consult with an attorney and accountant to ensure that you are following all necessary rules and regulations when running your business partnership.

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