A business partnership is a type of business structure in which two or more individuals or entities come together to own and operate a business. In a partnership, the partners share the profits, losses, and management responsibilities of the business.

To create a partnership, you should follow these steps:

Choose your partners: You should choose partners who have complementary skills and share your vision for the business. You should also discuss the roles and responsibilities of each partner, as well as the expected financial contributions.

Decide on the type of partnership: There are several types of partnerships, including general partnerships, limited partnerships, and limited liability partnerships. You should choose the type of partnership that best suits your needs.

Register your partnership: Depending on your state, you may be required to register your partnership with the Secretary of State or other regulatory agency. You may also need to obtain any necessary licenses or permits for your business.

Drafting of a partnership agreement: This is a legal document that outlines the terms of the partnership, including the contributions of each partner, the profit and loss sharing, the decision-making process, and the procedures for resolving disputes.

Obtain necessary tax and legal documents: You may need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) and register for state and local taxes. You should also consult with an attorney to ensure that your partnership complies with all legal requirements.

It's important to note that partnerships can be complex and require careful consideration of legal and financial issues. Before creating a partnership, it's recommended that you consult with an attorney and accountant to ensure that the partnership is the right structure for your business and that you have taken all necessary steps to protect yourself and your partners.
 

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.
 

While a written agreement is not always legally required to form a partnership, it is highly recommended that all partnerships have a written agreement in place. A written partnership agreement can help avoid misunderstandings and disputes between partners, and it can clarify the roles, responsibilities, and expectations of each partner.

In the absence of a written agreement, partnerships are typically governed by default rules under state law, such as the Uniform Partnership Act (UPA) or Revised Uniform Partnership Act (RUPA). These default rules may not reflect the specific needs or goals of the partners, and may not provide enough protection for the partners' interests.

A partnership agreement typically covers important topics such as:

Profit and loss sharing

Decision-making

Partner contributions and distributions

Management responsibilities

Dispute resolution

Partner exit and dissolution

Confidentiality and non-compete clauses

Taxation

It's important to note that the specific requirements for partnership agreements may vary depending on the state and the partnership agreement itself. It is recommended that you consult with an attorney to ensure that your partnership agreement meets all necessary legal requirements and protects the interests of all partners.
 

Before you go into business together, you and your partners should decide what will happen to the partnership when one partner retires or wants to leave the partnership for any other reason, such as a conflicts of interest or direction, divorce or bankruptcy. You might feel like you're being overly cautious or pessimistic, but it almost always makes sense to include "buy-sell" provisions in your partnership agreement to deal with these issues.

A partnership agreement is the best way to prevent resentments and serious problems (including messy lawsuits) from cropping up later on. The partnership agreement is the core of the partnership relationship and defines the roles and obligations of each partner.

Click on the Partnership Agreement tab above to draft your agreement.
 

Partnerships and Limited Liability Companies (LLCs) are both popular business structures, but they differ in several key ways. Here are some of the main differences between partnerships and LLCs:

Liability protection: In a partnership, all partners have unlimited personal liability for the debts and obligations of the business. In an LLC, on the other hand, members (the LLC equivalent of partners) typically have limited liability for the debts and obligations of the business. This means that members' personal assets are generally protected from business debts and lawsuits.

Management structure: Partnerships are typically managed by the partners themselves, with each partner having an equal say in the decision-making process. In contrast, LLCs can be managed by members or by managers appointed by the members. This can provide more flexibility in terms of management and decision-making.

Taxation: Partnerships are pass-through entities, meaning that profits and losses are reported on the partners' personal tax returns. In contrast, LLCs can choose how they are taxed - they can be taxed as a partnership, a corporation, or a sole proprietorship. This gives LLCs more flexibility in terms of tax planning.

Formalities and regulations: Partnerships generally have fewer formalities and regulations than LLCs. For example, partnerships are not required to file annual reports or maintain formal meeting minutes. LLCs, on the other hand, are required to file annual reports and adhere to other formalities depending on the state.

It's important to note that the specific differences between partnerships and LLCs may vary depending on the state and the partnership or LLC agreement itself.
 

Usually, when you hear the term "partnership," it refers to a general partnership -- that is, one where all partners participate to some extent in the day-to-day management of the business. Limited partnerships are very different from general partnerships, and are usually set up by companies that invest money in other businesses or real estate.

While limited partnerships have at least one general partner who controls the company's day-to-day operations and is personally liable for business debts, they also have passive partners called limited partners. Limited partners contribute capital to the business (investment money) but have minimal control over daily business decisions or operations.

In return for giving up management power, a limited partner's personal liability is capped at the amount of his or her investment. In other words, the limited partner's investment can go toward paying off any partnership debts, but the investor's personal assets cannot be touched -- this is called "limited liability." However, a limited partner who starts tinkering with the management of the business can quickly lose limited liability status.

Doing business as a limited partnership can be at least as costly and complicated as doing business as a corporation. For instance, complex securities laws often apply to the sale of limited partnership interests. Consult a lawyer with experience in setting up limited partnerships if you're interested in creating this type of business.