A partnership is a business that is owned by more than one owner. These owners share in operating the business and assume liabilities for is debts.  There are several types: [1]

  1. General Partnership: All owners share in assuming liability for the business debts.
  2. Limited Partnership: Has one or more limited partners who don’t have management responsibilities and only limited liability for the business debts
  3. Master Limited Partnership: Traded like a corporation but is taxed like a partnership and thus avoids corporate income tax.

Advantages of a Partnership: [1]

  •  More financial resources
  • Shared management skills and knowledge
  • Longer survival: 4 times more likely to succeed than sole proprietorship
  • No special taxes: Taxes as personal income

Disadvantages of a Partnership: [1]

  •  Unlimited liability
  • Division of profit
  • Disagreement among partners
  • Difficulty of termination

The federal government of the United States does not have specific statutory law governing the establishment of partnerships. Instead, each of the fifty states as well as the District of Columbia has its own statutes and common law that govern partnerships. These states largely follow general common law principles of partnerships whether a general partnership or a limited partnership. [2]

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